Heterogeneous Effects of Inter- and Intra-City Transportation Infrastructure on Economic Growth: Evidence from Chinese Cities

Abstract

The heterogeneous output effects of inter-city and intra-city transportation infrastructure in China are examined using 219 prefecture-level city data from 1999 to 2012. Using the panel fully-modified OLS analysis, we find that at the Chinese prefecture-level city the estimated contribution rate for highways ranges from 8.3-11.7% compared to 4.2-7.7% for railways and 5.8-7.5% for public roads without controlling for the effects of fiscal stimulus package in 2009 and 2010. With this package in effect, the contribution rate of public road network increases by 2.1% and that for highways decreases by 4.6% on average. We also provide empirical evidence for the unbalanced transport infrastructure development across regions and in three economic zones. It is shown that the eastern region should prioritize the intra-city infrastructure investment to alleviate the negative influence of within city congestion even though the economic impact of highway investment is the largest; while the economic growth of western region of China relies heavily on railway development and the middle area depends more on highway infrastructure investment.