The impact of improved passenger transport system on manufacturing plant productivity

Abstract

In this paper, we examine the effect of transportation infrastructure on the productivity of manufacturing plants. In particular, we analyze whether improved passenger transportation connections to metropolitan cities positively affect manufacturing plant productivity in peripheral regions. The introduction of the Korea Train eXpress (KTX) high-speed train in 2004 allows us to examine the impact of improved passenger transport. Applying a difference-in-differences framework to plant-level data, we examine whether the productivity of manufacturing plants in counties with high-speed train stations improves more than that in counties without high-speed train stations after the KTX introduction. The results suggest an increase of approximately 5 percent in the productivity of manufacturing plants due to the introduction of the high-speed rail.