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Infrastructure development and economic growth in China

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  • Sahoo, Pravakar
  • Dash, Ranjan Kumar
  • Nataraj, Geethanjali

Abstract

China is the fastest growing country in the world for last few decades and one of the defining features of China's growth has been investment-led growth. China's sustained high economic growth and increased competitiveness in manufacturing has been underpinned by a massive development of physical infrastructure. In this context, we investigate the role of infrastructure in promoting economic growth in China for the period 1975 to 2007. Overall, the results reveal that infrastructure stock, labour force, public and private investments have played an important role in economic growth in China. More importantly, we find that Infrastructure development in China has significant positive contribution to growth than both private and public investment. Further, there is unidirectional causality from infrastructure development to output growth justifying China's high spending on infrastructure development since the early nineties. The experience from China suggests that it is necessary to design an economic policy that improves the physical infrastructure as well as human capital formation for sustainable economic growth in developing countries.

Suggested Citation

  • 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).
  • Handle: RePEc:jet:dpaper:dpaper261
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    References listed on IDEAS

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    Cited by:

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    2. Simplice Asongu, 2015. "Determinants of Growth in Fast Developing Countries: Evidence from Bundling and Unbundling Institutions," Working Papers 15/010, African Governance and Development Institute..
    3. O. Owolabi-Merus, 2015. "Infrastructure Development and Economic Growth Nexus in Nigeria," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(1), pages 376-382, January.
    4. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    5. Marjit, Sugata & Mandal, Biswajit & Chatterjee, Tonmoy, 2016. "Infrastructure Development vs Direct Cash Transfer: A General Equilibrium Comparison," MPRA Paper 73126, University Library of Munich, Germany.
    6. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2017. "Public and private investment and economic growth in Malawi:An ARDL-bounds testing approach," Working Papers 22003, University of South Africa, Department of Economics.
    7. Asongu, Simplice, 2015. "Drivers of Growth in Fast Emerging Economies: A Dynamic Instrumental Quantile Approach," MPRA Paper 67309, University Library of Munich, Germany.
    8. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2017. "Public and private investment and economic growth in South Africa:An empirical investigation," Working Papers 22005, University of South Africa, Department of Economics.
    9. repec:gam:jsusta:v:9:y:2017:i:11:p:2108-:d:119535 is not listed on IDEAS
    10. repec:pdc:jrnbeh:v:13:y:2017:i:1:p:60-76 is not listed on IDEAS
    11. Patalinghug, Epictetus E., 2017. "Assessment of Planning and Programming for Capital Projects at the National and Agency Levels," Discussion Papers DP 2017-37, Philippine Institute for Development Studies.
    12. Chandan Sharma & Sanjay Sehgal, 2010. "Impact of infrastructure on output, productivity and efficiency: Evidence from the Indian manufacturing industry," Indian Growth and Development Review, Emerald Group Publishing, vol. 3(2), pages 100-121, September.
    13. Shahbaz, Muhammad, 2017. "Current Issues in Time-Series Analysis for the Energy-Growth Nexus; Asymmetries and Nonlinearities Case Study: Pakistan," MPRA Paper 82221, University Library of Munich, Germany, revised 19 Oct 2017.
    14. Garikai Makuyana & Nicholas M. Odhiambo, 2017. "Public and private investment and economic growth in Zimbabwe: An empirical test," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(1), pages 60-76, March.
    15. Lin, Justin Yifu & Doemeland, Doerte, 2012. "Beyond Keynesianism : global infrastructure investments in times of crisis," Policy Research Working Paper Series 5940, The World Bank.
    16. Strike Mbulawa, 2017. "The Impact Of Economic Infrastructure On Long Term Economic Growth In Botswana," Journal of Smart Economic Growth, , vol. 2(1), pages 15-33, March.
    17. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2016. "Public and private investment and economic growth in Zambia: A dynamic approach," Working Papers 21377, University of South Africa, Department of Economics.
    18. Hallonsten, Jan Simon & Ziesemer, Thomas, 2016. "A semi-endogenous growth model for developing countries with public factors, imported capital goods, and limited export demand," MERIT Working Papers 004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. repec:eee:trapol:v:61:y:2018:i:c:p:17-25 is not listed on IDEAS

    More about this item

    Keywords

    China; Infrastructure; Economic development; Investments; China; Investment; L9 - Industry Studies: Transportation and Utilities; H4 - Publicly provided goods; O1 - Economic development;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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