IDEAS home Printed from https://ideas.repec.org/p/fpr/ifprid/1542.html
   My bibliography  Save this paper

Roads to innovation: Firm-level evidence from China:

Author

Listed:
  • Wang, Xu
  • Zhang, Xiaobo
  • Xie, Zhuan
  • Huang, Yiping

Abstract

Although both infrastructure and innovation play an important role in fostering a country’s economic growth, discussion in the literature about how the two are connected is limited. This paper examines the impact of road density on firm innovation in China using a matched patent database at the firm level and road information at the city level. Regional variation in the difficulty of constructing roads is used as an instrumental variable to address the potential endogeneity problem of the road variable. The empirical results show that a 10 percent improvement in road density increases the average number of approved patents per firm by 0.71 percent. Road development spurs innovation by enlarging market size and facilitating knowledge spillover.

Suggested Citation

  • Wang, Xu & Zhang, Xiaobo & Xie, Zhuan & Huang, Yiping, 2016. "Roads to innovation: Firm-level evidence from China:," IFPRI discussion papers 1542, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:1542
    as

    Download full text from publisher

    File URL: http://cdm15738.contentdm.oclc.org/utils/getfile/collection/p15738coll2/id/130453/filename/130664.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joshua D. Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 69-85, Fall.
    2. Cameron,A. Colin & Trivedi,Pravin K., 2013. "Regression Analysis of Count Data," Cambridge Books, Cambridge University Press, number 9781107667273.
    3. Dave Donaldson & Richard Hornbeck, 2016. "Railroads and American Economic Growth: A "Market Access" Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 799-858.
    4. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    5. Volpe Martincus, Christian & Blyde, Juan, 2013. "Shaky roads and trembling exports: Assessing the trade effects of domestic infrastructure using a natural experiment," Journal of International Economics, Elsevier, vol. 90(1), pages 148-161.
    6. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 577-598.
    7. Nicholas Bloom & Mark Schankerman & John Van Reenen, 2013. "Identifying Technology Spillovers and Product Market Rivalry," Econometrica, Econometric Society, vol. 81(4), pages 1347-1393, July.
    8. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    9. Bougheas, Spiros & Demetriades, Panicos O. & Morgenroth, Edgar L. W., 1999. "Infrastructure, transport costs and trade," Journal of International Economics, Elsevier, vol. 47(1), pages 169-189, February.
    10. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 1049-1090.
    11. Li, Xibao, 2012. "Behind the recent surge of Chinese patenting: An institutional view," Research Policy, Elsevier, vol. 41(1), pages 236-249.
    12. Zhuan Xie & Xiaobo Zhang, 2015. "The patterns of patents in China," China Economic Journal, Taylor & Francis Journals, vol. 8(2), pages 122-142, May.
    13. Gilles Duranton & Peter M. Morrow & Matthew A. Turner, 2014. "Roads and Trade: Evidence from the US," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 681-724.
    14. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 87-117.
    15. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    16. Banerjee, Abhijit & Duflo, Esther & Qian, Nancy, 2020. "On the road: Access to transportation infrastructure and economic growth in China," Journal of Development Economics, Elsevier, vol. 145(C).
    17. Jacoby, Hanan G. & Minten, Bart, 2009. "On measuring the benefits of lower transport costs," Journal of Development Economics, Elsevier, vol. 89(1), pages 28-38, May.
    18. Choi, Suk Bong & Lee, Soo Hee & Williams, Christopher, 2011. "Ownership and firm innovation in a transition economy: Evidence from China," Research Policy, Elsevier, vol. 40(3), pages 441-452, April.
    19. Li, Han & Li, Zhigang, 2013. "Road investments and inventory reduction: Firm level evidence from China," Journal of Urban Economics, Elsevier, vol. 76(C), pages 43-52.
    20. Ajay Agrawal & Alberto Galasso & Alexander Oettl, 2017. "Roads and Innovation," The Review of Economics and Statistics, MIT Press, vol. 99(3), pages 417-434, July.
    21. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    22. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    23. Agrawal, Ajay & Cockburn, Iain & Galasso, Alberto & Oettl, Alexander, 2014. "Why are some regions more innovative than others? The role of small firms in the presence of large labs," Journal of Urban Economics, Elsevier, vol. 81(C), pages 149-165.
    24. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, vol. 101(1), pages 304-340, February.
    25. Daron Acemoglu & Jacob Moscona & James A. Robinson, 2016. "State Capacity and American Technology: Evidence from the 19th Century," NBER Working Papers 21932, National Bureau of Economic Research, Inc.
    26. Gollop, Frank M & Monahan, James L, 1991. "A Generalized Index of Diversification: Trends in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 318-330, May.
    27. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-level Productivity…For Some Plants," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1051-1099.
    28. Ajay K. Agrawal & John McHale & Alex Oettl, 2014. "Why Stars Matter," NBER Working Papers 20012, National Bureau of Economic Research, Inc.
    29. Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
    30. Dang, Jianwei & Motohashi, Kazuyuki, 2015. "Patent statistics: A good indicator for innovation in China? Patent subsidy program impacts on patent quality," China Economic Review, Elsevier, vol. 35(C), pages 137-155.
    31. John G. Fernald, 1999. "Roads to Prosperity? Assessing the Link between Public Capital and Productivity," American Economic Review, American Economic Association, vol. 89(3), pages 619-638, June.
    32. Hu, Albert Guangzhou & Jefferson, Gary H., 2009. "A great wall of patents: What is behind China's recent patent explosion?," Journal of Development Economics, Elsevier, vol. 90(1), pages 57-68, September.
    33. repec:fth:prinin:455 is not listed on IDEAS
    34. Donaldson, Dave, 2010. "Railroads of the Raj: estimating the impact of transportation infrastructure," LSE Research Online Documents on Economics 38368, London School of Economics and Political Science, LSE Library.
    35. Dave Donaldson, 2010. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," NBER Working Papers 16487, National Bureau of Economic Research, Inc.
    36. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    37. Shirley, Chad & Winston, Clifford, 2004. "Firm inventory behavior and the returns from highway infrastructure investments," Journal of Urban Economics, Elsevier, vol. 55(2), pages 398-415, March.
    38. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
    39. Daron Acemoglu & Jacob Moscona & James A. Robinson, 2016. "State Capacity and American Technology: Evidence from the Nineteenth Century," American Economic Review, American Economic Association, vol. 106(5), pages 61-67, May.
    40. J. V. Henderson & J. F. Thisse (ed.), 2004. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 4, number 4.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Xu & Xie, Zhuan & Zhang, Xiaobo & Huang, Yiping, 2018. "Roads to innovation: Firm-level evidence from People's Republic of China (PRC)," China Economic Review, Elsevier, vol. 49(C), pages 154-170.
    2. Gibbons, Stephen & Lyytikäinen, Teemu & Overman, Henry G. & Sanchis-Guarner, Rosa, 2019. "New road infrastructure: The effects on firms," Journal of Urban Economics, Elsevier, vol. 110(C), pages 35-50.
    3. Kairui Zheng & Yijie Li & Xiaohui Xin, 2022. "The Influencing Mechanism of High-Speed Rail on Innovation: Firm-Level Evidence from China," Sustainability, MDPI, vol. 14(24), pages 1-26, December.
    4. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    5. Stefano Magrini & Alessandro Spiganti, 2024. "A tale of two cities: Communication, innovation, and divergence," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 390-413, January.
    6. Li, Zhigang & Wu, Mingqin & Chen, Bin R., 2017. "Is road infrastructure investment in China excessive? Evidence from productivity of firms," Regional Science and Urban Economics, Elsevier, vol. 65(C), pages 116-126.
    7. Blonigen, Bruce A. & Cristea, Anca D., 2015. "Air service and urban growth: Evidence from a quasi-natural policy experiment," Journal of Urban Economics, Elsevier, vol. 86(C), pages 128-146.
    8. repec:esx:essedp:729 is not listed on IDEAS
    9. Liang, Yousha & Shi, Kang & Tao, Hanyi & Xu, Juanyi, 2024. "Learning by exporting: Evidence from patent citations in China," Journal of International Economics, Elsevier, vol. 150(C).
    10. Mao, Ning & Sun, Weizeng & Zhang, Liuqin, 2024. "The innovation effects of transportation infrastructure: Evidence from highways in China," Economics of Transportation, Elsevier, vol. 38(C).
    11. Kailthya, Subham & Kambhampati, Uma, 2022. "Road to productivity: Effects of roads on total factor productivity in Indian manufacturing," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 174-195.
    12. Çağatay Bircan & Ralph De Haas, 2020. "The Limits of Lending? Banks and Technology Adoption across Russia," The Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 536-609.
    13. Redding, Stephen, 2020. "Trade and Geography," CEPR Discussion Papers 15268, C.E.P.R. Discussion Papers.
    14. He, Xin & Xu, Xinwei & Shen, Yu, 2023. "How climate change affects enterprise inventory management —— From the perspective of regional traffic," Journal of Business Research, Elsevier, vol. 162(C).
    15. Nicholas Bloom & Paul Romer & Stephen J Terry & John Van Reenen, 2021. "Trapped Factors and China’s Impact on Global Growth [Competition and innovation: an inverted-U relationship]," The Economic Journal, Royal Economic Society, vol. 131(633), pages 156-191.
    16. Li, Chunying & Zhang, Jinning & Lyu, Yanwei, 2022. "Does the opening of China railway express promote urban total factor productivity? New evidence based on SDID and SDDD model," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    17. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Centre for Economic Performance, LSE.
    18. Chen, Yongmin & Jiang, Haiwei & Liang, Yousha & Pan, Shiyuan, 2022. "The impact of foreign direct investment on innovation: Evidence from patent filings and citations in China," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 917-945.
    19. Liu, Qing & Qiu, Larry D., 2016. "Intermediate input imports and innovations: Evidence from Chinese firms' patent filings," Journal of International Economics, Elsevier, vol. 103(C), pages 166-183.
    20. Wu, Mingqin & Yu, Linhui & Zhang, Junsen, 2023. "Road expansion, allocative efficiency, and pro-competitive effect of transport infrastructure: Evidence from China," Journal of Development Economics, Elsevier, vol. 162(C).
    21. Ajay Agrawal & Alberto Galasso & Alexander Oettl, 2017. "Roads and Innovation," The Review of Economics and Statistics, MIT Press, vol. 99(3), pages 417-434, July.

    More about this item

    Keywords

    infrastructure; innovation; transportation; technology transfer;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:ifprid:1542. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.