High Speed Rail, Regional Connectivity, and Economic Growth: Evidence from China

The study explores the heterogeneous effects of High-Speed Rail development on employment in China, with a specific focus on the “Hu Line,” employing Spatial Autoregressive models to analyze employment patterns across eastern and western regions. We find that HSR amplifies existing economic advantages in eastern regions, boosting investment, global market integration, and urban connectivity, which accelerates growth in already developed urban centers. Conversely, in the Western regions, HSR has still considerable potential to stimulate economic development by creating new industrial hubs and enhancing tourism opportunities. To date, the impact in the Western regions has been highly variable and contingent on local policies and infrastructure investments, but it clearly has the potential for a much greater benefit as diminishing returns emerge in the East and careful policy design is applied in the West. HSR increases overall labor mobility but exacerbates existing economic disparities. In the East, it fosters a dynamic labor market, while in the West, it risks intensifying brain drain. Employment opportunities created by HSR construction and operation are unevenly distributed, with more developed areas likely seeing greater diversification in job markets. Notwithstanding that HDR heightens economic efficiency, re-belancing its development towards equity objectives may further promote its appeal as a fundamental mechanism to kickstart economic growth.