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Evaluating China's road to prosperity: A new economic geography approach

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Listed:
  • Roberts, Mark
  • Deichmann, Uwe
  • Fingleton, Bernard
  • Shi, Tuo

Abstract

Over the last two decades, China has embarked on an ambitious program of expressway network expansion. By facilitating market integration, this program aims to promote efficiency at the national level and contribute to the catch-up of lagging inland regions. This paper evaluates the short-run aggregate and spatial economic impacts of network expansion. We adopt a counterfactual approach based on the hybrid estimation–calibration of a structural ‘new economic geography’ model. Overall, we find that aggregate Chinese real income was approximately 6% higher than it would have been in 2007 had the expressway network not been built, although this does not take into account the opportunity costs associated with expenditure on the network. Although there is considerable heterogeneity in the results, we find no significant reduction in disparities across prefectures and no reduction in urban–rural disparities. If anything, the expressway network appears to have reinforced existing patterns of spatial inequality; although, over time, these will likely be reduced by enhanced migration.

Suggested Citation

  • Roberts, Mark & Deichmann, Uwe & Fingleton, Bernard & Shi, Tuo, 2012. "Evaluating China's road to prosperity: A new economic geography approach," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 580-594.
  • Handle: RePEc:eee:regeco:v:42:y:2012:i:4:p:580-594
    DOI: 10.1016/j.regsciurbeco.2012.01.003
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    More about this item

    Keywords

    China; Transport infrastructure; Economic geography;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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