The Role of Infrastructure Capital in China’s Regional Economic Growth
AbstractThis paper investigates the role of infrastructure capital in China’s regional economic development during 1990 to 2009 in a neoclassical economic growth model. Four types of infrastructure capital are discussed; electricity, road, rail, and land-line telephone. The results support a positive role of infrastructure in improving economic wellbeing in China. It shows that infrastructure has contributed to the convergence among China’s provinces. However, declining growth momentum from rapid increase of road infrastructure, in particular for the Western region, suggests that road development in the region has been growing too fast. The results counter the conventional wisdom of “road leads to prosperity” widely accepted among national and local governments in China. Thus, the seemingly productive infrastructure capital, when invested beyond a proper level or speed, will become unproductive. The results resonate with the theoretical literature on the inverse U shaped growth impact of infrastructure capital and the dominant “crowding out” of private capital if there is too much infrastructure. They also address the puzzle in the current literature debates as to the direction and magnitude of the growth impact of infrastructure capital.
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126547.
Date of creation: 20 Jun 2012
Date of revision:
infrastructure; economic growth; regional inequality; China; International Development; Production Economics; Public Economics; H54; O18; R11;
Find related papers by JEL classification:
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-23 (All new papers)
- NEP-DEV-2012-07-23 (Development)
- NEP-GEO-2012-07-23 (Economic Geography)
- NEP-PBE-2012-07-23 (Public Economics)
- NEP-TRA-2012-07-23 (Transition Economics)
- NEP-TRE-2012-07-23 (Transport Economics)
- NEP-URE-2012-07-23 (Urban & Real Estate Economics)
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