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Highways, Market Access and Urban Growth in China

Listed author(s):
  • Nathaniel Baum-Snow
  • Loren Brandt
  • J. Vernon Henderson
  • Matthew A. Turner
  • Qinghua Zhang

We investigate the effects of the construction of the national highway system in China on local economic outcomes. The analysis employs three main approaches. The first is based on a structural model of Ricardian trade that provides an explicit description of the general equilibrium effects of changes in the highway network. The second involves reduced form estimates of the casual effects highways, which accommodates the non-random assignment of highways across locations. The third approach is a hybrid of the first two. Technique matters. The structural model suggests that access to domestic markets, but not to export markets, increases economic output. The reduced form estimates suggest the opposite conclusion and also point to the importance of highways in the rise of regional primate cities. These reduced form findings are consistent with export driven growth policies and central or provincial government policies favouring regional primate cities. In addition to informing policy, our results raise concerns about the use of quantitative results from Ricardian trade models in isolation for understanding how and the extent to which infrastructure drives regional growth.

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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0200.pdf
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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0200.

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Date of creation: Jun 2016
Handle: RePEc:cep:sercdp:0200
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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  1. Sebastian Sotelo, 2015. "Domestic Trade Frictions and Agriculture," Working Papers 641, Research Seminar in International Economics, University of Michigan.
  2. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
  3. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 549-576.
  4. Gilles Duranton & Matthew A. Turner, 2011. "The Fundamental Law of Road Congestion: Evidence from US Cities," American Economic Review, American Economic Association, vol. 101(6), pages 2616-2652, October.
  5. Bird, Julia & Straub, Stéphane, 2014. "The Brasília Experiment: Road Access and the Spatial Pattern of Long-term Local Development in Brazil," TSE Working Papers 14-495, Toulouse School of Economics (TSE).
  6. Guy Michaels & Ferdinand Rauch & Stephen J. Redding, 2012. "Urbanization and Structural Transformation," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 535-586.
  7. Trevor Tombe & Xiaodong Zhu, 2015. "Trade, Migration and Productivity: A Quantitative Analysis of China," Working Papers tecipa-542, University of Toronto, Department of Economics.
  8. Simon Alder, 2015. "Chinese Roads in India: The Effect of Transport Infrastructure on Economic Development," 2015 Meeting Papers 1447, Society for Economic Dynamics.
  9. Tabuchi, Takatoshi & Thisse, Jacques-François, 2011. "A new economic geography model of central places," Journal of Urban Economics, Elsevier, vol. 69(2), pages 240-252, March.
  10. Desmet, Klaus & Nagy, David Krisztián & Rossi-Hansberg, Esteban, 2015. "The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding," CEPR Discussion Papers 10544, C.E.P.R. Discussion Papers.
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