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High-speed rail and inventory reduction: firm-level evidence from China

Author

Listed:
  • Chuantao Cui
  • Leona Shao-Zhi Li

Abstract

Using a balanced panel of manufacturing firms from China between 2007 and 2013, we estimate that being connected to a high-speed rail (HSR) system leads to 9.5% reduction in local firms’ input inventory spending. The effect is stronger for downstream industries and private enterprises. A back-of-envelope calculation suggests that each dollar of HSR investment reduces input inventory stock by 12 cents, which is significantly larger than the effects found in previous studies based on highway or road investment. Declines in transportation and communication cost, as well as agglomeration effect, are identified as plausible mechanisms. Our findings reveal a micro channel through which improved transport infrastructure brings about economic gains, and contribute to the cost-benefit assessment of HSR investment.

Suggested Citation

  • Chuantao Cui & Leona Shao-Zhi Li, 2019. "High-speed rail and inventory reduction: firm-level evidence from China," Applied Economics, Taylor & Francis Journals, vol. 51(25), pages 2715-2730, May.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:25:p:2715-2730
    DOI: 10.1080/00036846.2018.1558353
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    Cited by:

    1. Minhua Yang & Rui Yao & Linkun Ma & Ang Yang, 2024. "Towards a Low-Carbon Target: How the High-Speed Rail and Its Expansion Affects Industrial Concentration and Macroeconomic Conditions: Evidence from Chinese Urban Agglomerations," Sustainability, MDPI, vol. 16(19), pages 1-18, September.
    2. Yunmin Wang & Jie Dong & Jingjing Wang, 2025. "Does High-Speed Rail Promote Residents’ Subjective Well-Being? Evidence From China," SAGE Open, , vol. 15(1), pages 21582440251, February.
    3. Jinxing Hu & Guojie Ma & Chaohai Shen & Xiaolan Zhou, 2022. "Impact of Urbanization through High-Speed Rail on Regional Development with the Interaction of Socioeconomic Factors: A View of Regional Industrial Structure," Land, MDPI, vol. 11(10), pages 1-21, October.
    4. Xiong, Jiacai & Ouyang, Caiyue & Tong, Jamie Yixing & Zhang, Feida Frank, 2021. "Fraud commitment in a smaller world: Evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 70(C).
    5. Ouyang, Caiyue & Xiong, Jiacai & Liu, Li & Yao, Jun, 2024. "Geographic proximity and trade credit: Evidence from a quasi-natural experiment," Journal of Corporate Finance, Elsevier, vol. 84(C).
    6. Xiaotao Zhao & Xiaoping Chen, 2020. "Export And Inventory: Evidence From Chinese Firms," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(02), pages 403-417, March.
    7. Huang, Yingshan & Ouyang, Haiqin & Pan, Weihua & He, Xiaogang, 2023. "Role of high-speed rail services in China’s economic recovery: Evidence from manufacturing firm inventories," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 389-405.
    8. Zhaohua Zhang & Zhao Zhang & Xin Wang & Derrick Robinson, 2023. "Unraveling the rectifying role of transportation improvement on resource misallocation among manufacturing firms in China–Facts and mechanism," PLOS ONE, Public Library of Science, vol. 18(8), pages 1-22, August.
    9. Rodriguez Repeti Juan Manuel & Trupkin Danilo Rogelio, 2025. "El rol de los inventarios en los ciclos económicos: evidencia para países desarrollados y en desarrollo," Asociación Argentina de Economía Política: Working Papers 4835, Asociación Argentina de Economía Política.
    10. Yu Jia & Yunqian Wang & Piao Li & Shuang Gao, 2024. "Economic Communication: The Influence of High-Speed Rail on Urban-Rural Income Inequality in China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(1), pages 47-73, August.
    11. Li, He & Lu, Juan & Guo, Feiyu, 2022. "High speed rail and corporate social responsibility performance: Analysis of intra-regional location and inter-regional spillover," Transport Policy, Elsevier, vol. 128(C), pages 65-75.
    12. Xu, Fei & Liu, Qian & Zheng, Xingdong & Cao, Luqi & Yang, Mian, 2022. "Research on the impact of China's high-speed rail opening on enterprise market power: Based on the perspective of market segmentation," Transport Policy, Elsevier, vol. 128(C), pages 121-137.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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