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Connective financing: Chinese infrastructure projects and the diffusion of economic activity in developing countries

Author

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  • Bluhm, Richard
  • Dreher, Axel
  • Fuchs, Andreas
  • Parks, Bradley C.
  • Strange, Austin M.
  • Tierney, Michael J.

Abstract

This paper studies the causal effect of transport infrastructure on the spatial distribution of economic activity within subnational regions across a large number of developing countries. To do so, we introduce a new global dataset of geolocated Chinese grant- and loan-financed development projects from 2000 to 2014 and combine it with measures of spatial concentration based on remotely sensed data. We find that Chinese financed transportation projects decentralize economic activity within regions, as measured by a spatial Gini coefficient, by 2.2 percentage points. The treatment effects are particularly strong in regions that are less developed, more urbanized, and located closer to cities.

Suggested Citation

  • Bluhm, Richard & Dreher, Axel & Fuchs, Andreas & Parks, Bradley C. & Strange, Austin M. & Tierney, Michael J., 2025. "Connective financing: Chinese infrastructure projects and the diffusion of economic activity in developing countries," Open Access Publications from Kiel Institute for the World Economy 318203, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkie:318203
    DOI: 10.1016/j.jue.2024.103730
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    More about this item

    Keywords

    Development finance; Transport costsInfrastructure; Foreign aid; Spatial concentration; China;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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