Transportation Infrastructure And Economic Growth

The Thirteenth Five-Year Development Plan has pointed out that China faces the development condition of substantial improvement in infrastructure,accelerated development of high-tech and strategic rising industries.Also,the Plan emphasizes that accelerating the improvement of the high-speed-rail network is the national transportation construction project with top priority.In this context,on one hand,considering the stylized fact of location heterogeneity,can high speed rail(HSR),a representative high-tech manufacturing industry and the key project of transportation infrastructure in China,promote local economic growth for targeted cities and regions in China?What types of cities or industries are more likely to gain or potentially lose due to HSR?Can HSR investment bring inclusive growth?What is the working mechanism behind such growth impact and what brings about the heterogeneous response to HSR projects?On the other hand,while the government ultimately wants to determine the optimal scale and structure of infrastructure network,a necessary precursor to describe the optimal infrastructure networks is the role of infrastructure which is essential for industrialization,typically transportation,electricity and telecommunication.How various dimensions including quantity,quality and structure of such infrastructure affect economic growth for a country or region at certain development stage?Existing studies have made substantial contributions to evaluate the growth impact of transportation infrastructure,though with a few limitations.For instance,first,the underlying behavioral assumption of the conventional IV-2SLS method is the homogeneous response of each individual unit(Heckman,1997),which could very likely contradict with one of the key stylized facts that locations are heterogeneous(Behrens and Robert-Nicoud,2015).Second,quasi-experimental design restricts transportation studies to inconsequential regions(Redding and Turner,2015),hence could hardly focus on targeted regions.Besides,although providing quasi-random variation of transportation infrastructure,it need to face the inevitable bias caused by spatial interaction or spillover impacts happened more frequently at lower special scales.And inconsequential units approach can hardly answer the key question that whether better transportation help China as a whole(Banerjee et al.2012)Third,existing literature largely ignores the public expenditure structure for infrastructure sector which directly contributes to economic growth(Barro,1990).To provide robust evidence for research questions raised in my dissertation,while dealing with the limitations in existing literature at the same time,my dissertation exploits appropriate panel data program evaluation methods and analyzes focusing on the following three aspects:First,this dissertation evaluates the effect of HSR projects on the economic growth of targeted city nodes(HSR cities)in China using prefectural-level city data from 1990 to 2013.Employing a panel data program evaluation method devised by Hsiao,Ching,and Wan(2012),I construct hypothetical counterfactuals for per capita real GDP of HSR cities in the absence of their respective HSR projects using the outcomes in selected non-HSR cities.I find that the responses to HSR treatment are heterogeneous with regard to location,route,and region.The location-level impact ranges between 5%and 59%and is not temporary.HSR cities with positive effects concentrate along the Hu-Ning Segment,the Yong-Tai-Wen-Fu-Xia Segment,and within the Hunan province along the Wu-Guang HSR.These cities are mainly located in the eastern coastal regions of China,in core urban agglomeration regions that allow them to be transportation hubs.In general,the gain for local economies is greater for cities that are more industrialized,with more ability of the service sector to absorb enough labor,and with better supporting infrastructure.On the other hand,local protectionism hampers the development of HSR cities.Second,the dissertation further investigates the economic impacts of High Speed Rail projects for targeted city locations with heavy-industry-based economy,taking the Qinhuangdao-Shenyang HSR project in China as a case study.Using the synthetic control method proposed and developed by Abadie et al.(2003,2010,2015)to construct appropriate counterfactuals,I find that within our policy evaluation period in 1999-2013:(1)The per capita real GDP of most HSR cities along the Qin-Shen HSR line increase,though the magnitudes different.Locations having significant and the most benefit is Shenyang,the provincial capital,and Panjin,the oil city.The rest of the locations received negligible impacts.(2)By comparing sectoral employment between HSR city and their synthetic control group,I find that employment increases in most of the non-tradable sectors including construction,wholesale and retail,transportation,financial sectors,tourism industry and other services,also for certain tradable sector e.g.mining.Moreover,it is the size of the direct labor demand shocks and subsequent indirect employment effects on non-tradable service sectors contribute to the increase in per capita real GDP and explain the heterogeneous HSR impacts.(3)I did not find any evidence for government intervention or investment-driven HSR impacts when the infrastructure construction period has been finished.The results suggest that the first HSR project in China can help heavy-industry-based cities utilizing their comparative advantage,to promote industry transformation and diversification so to achieve inclusive growth.Third,the dissertation utilizes the most recently(2007-2015)available across-province information from NBSC about the infrastructure structure in public expenditure to investigate the causal impact of infrastructure on China economic growth.The study extends the previous work of Demurger(2001)to the dynamic panel data context,in which the unobserved province-specific effects,potential endogeneity of all explanatory variables in the growth regression and measurement error of regressors are controlled for and adjusted.The study finds that infrastructure development has a positive causal effect on economic growth in China within the research period,among which the quality of road,transportation and electricity structure in public expenditure,and telephone popularity has statistically significant impact.The results are robust to the inclusion of various control variables,dealing with potential outliers and after taking account of regional confounding factors.Moreover,I find that the positive growth impact of electricity structure in public expenditure is significantly lower in West than the rest of China.The positive impact of telecommunication measured by phone popularity is significantly higher in Western China and such significant impact does not-exist in East or Middle regions.The evidence shows that at certain stage of economic development,bottleneck-easing infrastructure improvement that aims at enhancing infrastructure quality and upgrading industry structure plays a crucial role for economic growth.In addition,the contribution of infrastructure to the economy depends on the macroeconomic condition both at home and abroad,regional economic development stages,policy orientation and the level and type of infrastructure.