IDEAS home Printed from https://ideas.repec.org/a/spr/anresc/v66y2021i1d10.1007_s00168-020-01012-3.html
   My bibliography  Save this article

The nexus of transport infrastructure and economic output in city-level China: a heterogeneous panel causality analysis

Author

Listed:
  • Sanwei He

    (Zhongnan University of Economics and Law)

  • Shan Yu

    (East China Normal University)

  • Lei Wang

    (Chinese Academy of Sciences
    The University of Manchester)

Abstract

The nexus between transport infrastructure and economic output has been subject to heated debates. Existing studies investigating their nexus between transportation and economic growth tend to focus on macroscales and utilize panel data but assume homogeneity across individual units. This paper aims to handle the problem of geographic heterogeneity and panel heterogeneity embedded in Granger causality between transportation and economic growth in China. According to a panel data of 216 cities from 1999 to 2014, heterogeneous Granger non-causality model at the nation level and region-specific heterogeneous Granger non-causality models are established. Results show that the heterogeneity of their mutual causality across cities cannot be neglected. In the direction from transport infrastructure to economic output, this paper finds homogeneous causality in all geographic regions except central China and it proves that the pulling effect of transportation on economic growth is positive in China but relatively marginal in eastern and western regions. In the reverse direction, heterogeneous causality can be found in all geographic regions. However, western region finds negative impact of economic growth on transportation. Overall, bidirectional causality is observed in 53.24% of the cities (115 out of 216) in the panel. Unidirectional causality is observed in about 39.35% (85 out of 216) and no causality in 7.41% (16 out of 216). This paper concludes with some main findings and region-specific policy implications.

Suggested Citation

  • Sanwei He & Shan Yu & Lei Wang, 2021. "The nexus of transport infrastructure and economic output in city-level China: a heterogeneous panel causality analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(1), pages 113-135, February.
    • Handle: RePEc:spr:anresc:v:66:y:2021:i:1:d:10.1007_s00168-020-01012-3
    DOI: 10.1007/s00168-020-01012-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00168-020-01012-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00168-020-01012-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fleisher, Belton M. & Chen, Jian, 1997. "The Coast-Noncoast Income Gap, Productivity, and Regional Economic Policy in China," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 220-236, October.
    2. Masahisa Fujita & Tomoya Mori, 2005. "Transport development and the evolution of economic geography," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 4(2), pages 129-156, August.
    3. Rietveld, P. & Nijkamp, P., 1992. "Transport and regional development," Serie Research Memoranda 0050, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    4. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    5. Jiwattanakulpaisarn, Piyapong & Noland, Robert B. & Graham, Daniel J., 2010. "Causal linkages between highways and sector-level employment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(4), pages 265-280, May.
    6. Boarnet, Marlon G., 1996. "The Direct and Indirect Economic Effects of Transportation Infrastructure," University of California Transportation Center, Working Papers qt1506r290, University of California Transportation Center.
    7. Iacono, Michael & Levinson, David, 2016. "Mutual causality in road network growth and economic development," Transport Policy, Elsevier, vol. 45(C), pages 209-217.
    8. Jiang, Xiushan & He, Xiang & Zhang, Lei & Qin, Huanhuan & Shao, Fengru, 2017. "Multimodal transportation infrastructure investment and regional economic development: A structural equation modeling empirical analysis in China from 1986 to 2011," Transport Policy, Elsevier, vol. 54(C), pages 43-52.
    9. Fedderke, J.W. & Perkins, P. & Luiz, J.M., 2006. "Infrastructural investment in long-run economic growth: South Africa 1875-2001," World Development, Elsevier, vol. 34(6), pages 1037-1059, June.
    10. Riccardo Crescenzi & Andrés Rodríguez-Pose, 2012. "An ‘Integrated’ Framework For The Comparative Analysis Of The Territorial Innovation Dynamics Of Developed And Emerging Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 26(3), pages 517-533, July.
    11. Xiaobo Zhang & Shenggen Fan, 2004. "How Productive Is Infrastructure? A New Approach and Evidence from Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 492-501.
    12. Masahisa Fujita & Paul Krugman, 2004. "The new economic geography: Past, present and the future," Advances in Spatial Science, in: Raymond J. G. M. Florax & David A. Plane (ed.), Fifty Years of Regional Science, pages 139-164, Springer.
    13. Roger Vickerman & Klaus Spiekermann & Michael Wegener, 1999. "Accessibility and Economic Development in Europe," Regional Studies, Taylor & Francis Journals, vol. 33(1), pages 1-15.
    14. Fujita , Masahisa & Krugman, Paul, 2004. "The new economic geography: Past, present and the future," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 4, pages 177-206.
    15. Ernst R. Berndt & Bengt Hansson, 1991. "Measuring the Contribution of Public Infrastructure Capital in Sweden," NBER Working Papers 3842, National Bureau of Economic Research, Inc.
    16. Erkan Erdil & I. Hakan Yetkiner, 2009. "The Granger-causality between health care expenditure and output: a panel data approach," Applied Economics, Taylor & Francis Journals, vol. 41(4), pages 511-518.
    17. Erkan Erdil & I. Hakan Yetkiner, 2004. "A Panel Data Approach for Income-Health Causality," Working Papers FNU-47, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
    18. Pradhan, Rudra P. & Bagchi, Tapan P., 2013. "Effect of transportation infrastructure on economic growth in India: The VECM approach," Research in Transportation Economics, Elsevier, vol. 38(1), pages 139-148.
    19. Liddle, Brantley & Lung, Sidney, 2013. "The long-run causal relationship between transport energy consumption and GDP: Evidence from heterogeneous panel methods robust to cross-sectional dependence," Economics Letters, Elsevier, vol. 121(3), pages 524-527.
    20. Daniel Chatman & Robert Noland, 2011. "Do Public Transport Improvements Increase Agglomeration Economies? A Review of Literature and an Agenda for Research," Transport Reviews, Taylor & Francis Journals, vol. 31(6), pages 725-742.
    21. Garcia-Mila, Teresa & McGuire, Therese J & Porter, Robert H, 1996. "The Effect of Public Capital in State-Level Production Functions Reconsidered," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 177-180, February.
    22. Spiros Bougheas & Panicos O. Demetriades & Theofanis P. Mamuneas, 2000. "Infrastructure, specialization, and economic growth," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(2), pages 506-522, May.
    23. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    24. Qin, Duo & Cagas, Marie Anne & Quising, Pilipinas & He, Xin-Hua, 2006. "How much does investment drive economic growth in China?," Journal of Policy Modeling, Elsevier, vol. 28(7), pages 751-774, October.
    25. Farhadi, Minoo, 2015. "Transport infrastructure and long-run economic growth in OECD countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 73-90.
    26. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    27. Seitz, Helmut, 1993. "A Dual Economic Analysis of the Benefits of the Public Road Network," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 27(3), pages 223-239, September.
    28. Crihfield, John B. & Panggabean, Martin P. H., 1995. "Is public infrastructure productive? A metropolitan perspective using new capital stock estimates," Regional Science and Urban Economics, Elsevier, vol. 25(5), pages 607-630, October.
    29. Mehmet Aldonat Beyzatlar & Müge Karacal & Ý. Hakan Yetkiner, 2012. "The Granger-Causality between Transportation and GDP: A Panel Data Approach," Working Papers 1203, Izmir University of Economics.
    30. Tong, Tingting & Yu, Tun-Hsiang Edward & Cho, Seong-Hoon & Jensen, Kimberly & De La Torre Ugarte, Daniel, 2013. "Evaluating the spatial spillover effects of transportation infrastructure on agricultural output across the United States," Journal of Transport Geography, Elsevier, vol. 30(C), pages 47-55.
    31. Niloy Bose & M. Emranul Haque, 2005. "Causality Between Public Investment In Transport And Communication And Economic Growth," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 95-106, June.
    32. Arvin, Mak B. & Pradhan, Rudra P. & Norman, Neville R., 2015. "Transportation intensity, urbanization, economic growth, and CO2 emissions in the G-20 countries," Utilities Policy, Elsevier, vol. 35(C), pages 50-66.
    33. Akkemik, K. Ali & Göksal, Koray, 2012. "Energy consumption-GDP nexus: Heterogeneous panel causality analysis," Energy Economics, Elsevier, vol. 34(4), pages 865-873.
    34. John G. Fernald, 1999. "Roads to Prosperity? Assessing the Link between Public Capital and Productivity," American Economic Review, American Economic Association, vol. 89(3), pages 619-638, June.
    35. He, Dong & Zhang, Wenlang, 2010. "How dependent is the Chinese economy on exports and in what sense has its growth been export-led?," Journal of Asian Economics, Elsevier, vol. 21(1), pages 87-104, February.
    36. M E Haque & D H Kim, 2003. "Public Investment in Transportation and Communication and Growth: A Dynamic Panel Approach," Economics Discussion Paper Series 0324, Economics, The University of Manchester.
    37. Pradhan, Rudra P., 2019. "Investigating the causal relationship between transportation infrastructure, financial penetration and economic growth in G-20 countries," Research in Transportation Economics, Elsevier, vol. 78(C).
    38. Maddison, David & Rehdanz, Katrin, 2008. "Carbon emissions and economic growth: homogeneous causality in heterogeneous panels," Kiel Working Papers 1437, Kiel Institute for the World Economy (IfW Kiel).
    39. U. Blum, 1982. "Effects Of Transportation Investments On Regional Growth: A Theoretical And Empirical Investigation," Papers in Regional Science, Wiley Blackwell, vol. 49(1), pages 169-184, January.
    40. Randolph, Susan*Bogetic, Zeljko*Hefley, Dennis, 1996. "Determinants of public expenditure on infrastructure : transportation and communication," Policy Research Working Paper Series 1661, The World Bank.
    41. Elton Fernandes & Ricardo Rodrigues Pacheco, 2010. "The causal relationship between GDP and domestic air passenger traffic in Brazil," Transportation Planning and Technology, Taylor & Francis Journals, vol. 33(7), pages 569-581, July.
    42. Sturm, Jan-egbert & Jacobs, Jan & Groote, Peter, 1999. "Output Effects of Infrastructure Investment in the Netherlands, 1853-1913," Journal of Macroeconomics, Elsevier, vol. 21(2), pages 355-380, April.
    43. Lall, Somik V. & Shalizi, Zmarak & Deichmann, Uwe, 2004. "Agglomeration economies and productivity in Indian industry," Journal of Development Economics, Elsevier, vol. 73(2), pages 643-673, April.
    44. Andros Gregoriou & Sugata Ghosh, 2009. "The Impact Of Government Expenditure On Growth: Empirical Evidence From A Heterogeneous Panel," Bulletin of Economic Research, Wiley Blackwell, vol. 61(1), pages 95-102, January.
    45. Demurger, Sylvie, 2001. "Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 95-117, March.
    46. William E. Cullison, 1993. "Public investment and economic growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 19-34.
    47. Wim P. M. Vijverberg & Chu-Ping C. Vijverberg & Janet L. Gamble, 1997. "Public Capital And Private Productivity," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 267-278, May.
    48. repec:dau:papers:123456789/6159 is not listed on IDEAS
    49. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
    50. Song, Lili & van Geenhuizen, Marina, 2014. "Port infrastructure investment and regional economic growth in China: Panel evidence in port regions and provinces," Transport Policy, Elsevier, vol. 36(C), pages 173-183.
    51. Somik Lall, 2007. "Infrastructure and regional growth, growth dynamics and policy relevance for India," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(3), pages 581-599, September.
    52. Sahoo, Pravakar & Dash, Ranjan Kumar & Nataraj, Geethanjali, 2010. "Infrastructure development and economic growth in China," IDE Discussion Papers 261, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    53. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jozef Gnap & Šimon Senko & Mariusz Kostrzewski & Mária Brídziková & Renáta Cződörová & Zdeněk Říha, 2021. "Research on the Relationship between Transport Infrastructure and Performance in Rail and Road Freight Transport—A Case Study of Japan and Selected European Countries," Sustainability, MDPI, vol. 13(12), pages 1-20, June.
    2. Chengjuan Xia & Md. Qamruzzaman & Anass Hamadelneel Adow, 2022. "An Asymmetric Nexus: Remittance-Led Human Capital Development in the Top 10 Remittance-Receiving Countries: Are FDI and Gross Capital Formation Critical for a Road to Sustainability?," Sustainability, MDPI, vol. 14(6), pages 1-24, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mehmet Aldonat Beyzatlar & Müge Karacal & Ý. Hakan Yetkiner, 2012. "The Granger-Causality between Transportation and GDP: A Panel Data Approach," Working Papers 1203, Izmir University of Economics.
    2. Holmgren, Johan & Merkel, Axel, 2017. "Much ado about nothing? – A meta-analysis of the relationship between infrastructure and economic growth," Research in Transportation Economics, Elsevier, vol. 63(C), pages 13-26.
    3. Park, Jin Suk & Seo, Young-Joon & Ha, Min-Ho, 2019. "The role of maritime, land, and air transportation in economic growth: Panel evidence from OECD and non-OECD countries," Research in Transportation Economics, Elsevier, vol. 78(C).
    4. Li, Hongbo & Liu, Yali & Peng, Kaili, 2018. "Characterizing the relationship between road infrastructure and local economy using structural equation modeling," Transport Policy, Elsevier, vol. 61(C), pages 17-25.
    5. Samir, Saidi & Shahbaz, Muhammad & Akhtar, Pervaiz, 2018. "The Long-Run Relationship between Transport Energy Consumption and Transport Infrastructure on Economic Growth in MENA Countries," MPRA Paper 85037, University Library of Munich, Germany, revised 06 Mar 2018.
    6. Magazzino, Cosimo & Giolli, Lorenzo, 2021. "The relationship among railway networks, energy consumption, and real added value in Italy. Evidence form ARDL and Wavelet analysis," Research in Transportation Economics, Elsevier, vol. 90(C).
    7. Elena Cigu & Daniela Tatiana Agheorghiesei & Anca Florentina Gavriluță (Vatamanu) & Elena Toader, 2018. "Transport Infrastructure Development, Public Performance and Long-Run Economic Growth: A Case Study for the Eu-28 Countries," Sustainability, MDPI, vol. 11(1), pages 1-22, December.
    8. Saidi, Samir & Shahbaz, Muhammad & Akhtar, Pervaiz, 2018. "The long-run relationships between transport energy consumption, transport infrastructure, and economic growth in MENA countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 78-95.
    9. Alam, Khalid Mehmood & Li, Xuemei & Baig, Saranjam & Ghanem, Osman & Hanif, Salman, 2021. "Causality between transportation infrastructure and economic development in Pakistan: An ARDL analysis," Research in Transportation Economics, Elsevier, vol. 88(C).
    10. Özer, Mustafa & Canbay, Şerif & Kırca, Mustafa, 2021. "The impact of container transport on economic growth in Turkey: An ARDL bounds testing approach," Research in Transportation Economics, Elsevier, vol. 88(C).
    11. Arvin, Mak B. & Pradhan, Rudra P. & Norman, Neville R., 2015. "Transportation intensity, urbanization, economic growth, and CO2 emissions in the G-20 countries," Utilities Policy, Elsevier, vol. 35(C), pages 50-66.
    12. Anyu Chen & Yueran Li & Kunhui Ye & Tianyi Nie & Rui Liu, 2021. "Does Transport Infrastructure Inequality Matter for Economic Growth? Evidence from China," Land, MDPI, vol. 10(8), pages 1-21, August.
    13. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    14. Fedderke, J.W. & Bogetic, Z., 2009. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," World Development, Elsevier, vol. 37(9), pages 1522-1539, September.
    15. Maparu, Tuhin Subhra & Mazumder, Tarak Nath, 2017. "Transport infrastructure, economic development and urbanization in India (1990–2011): Is there any causal relationship?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 319-336.
    16. Qi, Guanqiu & Shi, Wenming & Lin, Kun-Chin & Yuen, Kum Fai & Xiao, Yi, 2020. "Spatial spillover effects of logistics infrastructure on regional development: Evidence from China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 96-114.
    17. Stephane Straub, 2008. "Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges," Edinburgh School of Economics Discussion Paper Series 179, Edinburgh School of Economics, University of Edinburgh.
    18. Valter Di Giacinto & Giacinto Micucci & Pasqualino Montanaro, 2012. "The Macroeconomic Impact of Infrastructures: A Literature Review and Empirical Analysis on the Case of Italy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
    19. Calderon, Cesar & Serven, Luis, 2014. "Infrastructure, growth, and inequality : an overview," Policy Research Working Paper Series 7034, The World Bank.
    20. Mohmand, Yasir Tariq & Mehmood, Fahad & Mughal, Khurrum Shahzad & Aslam, Faheem, 2021. "Investigating the causal relationship between transport infrastructure, economic growth and transport emissions in Pakistan," Research in Transportation Economics, Elsevier, vol. 88(C).

    More about this item

    JEL classification:

    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:anresc:v:66:y:2021:i:1:d:10.1007_s00168-020-01012-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.