Impact of high-speed rail on urban economic efficiency in China

Abstract

The development of high-speed rail (HSR) plays an essential role in regional economic growth. HSR service facilitates labor mobility and intercity resource allocation and promotes industrial agglomeration. This paper examines a fundamental question related to large-scale HSR development in China: what is the impact of HSR development on urban economic efficiency? This question is investigated from three perspectives. Firstly, the role of HSR on regional economic efficiency is discussed theoretically from the perspective of an agglomeration economy. Secondly, a multi-phase Difference-in-Difference (DID) method was adopted to investigate whether the opening of HSR contributed to variations in urban economic efficiency. Thirdly, a threshold model was adopted to empirically examine the relationship between HSR service frequency and urban economic efficiency. The results show that the opening of HSR has a significant positive impact on urban economic efficiency; the longer the service is in operation, the higher the positive impact is. In addition, the opening of HSR was found to have a significant threshold effect on efficiency improvements in the service sector. In particular, the positive impact of HSR service frequency on urban economic efficiency is found to be two times larger in cities where the population density exceeds 763 people/km2 than other HSR cities with a density that is below the level. Overall, this study provides important implications for HSR operation and policymaking related to infrastructure planning and investment, which may facilitate more efficient economic growth among various cities.