Heterogeneous effects of inter- and intra-city transportation infrastructure on economic growth: Evidence from Chinese cities

Abstract

This article studies the heterogeneous effects of inter- and intra-city transportation infrastructure on the growth of cities using a panel dataset comprising 219 Chinese cities over 1999–2012. According to panel FMOLS estimates, the long-term contribution of inter-city infrastructure (highways or railways) accounts for 6% of city growth, that of intra-city public transit being 2%. The core cities are found to benefit more from these infrastructures than peripheral cities. The short-run dynamic analyses using VECM reveal asymmetric bidirectional causal effects between transportation and economic growth. Notably, the impacts of transport infrastructures on economic growth are most pronounced in the west but least in central China. Eastern China benefits strongly from investments in transportation infrastructure even though such infrastructure is abundant.