Transport Infrastructure, Spatial Clusters and Regional Economic Growth in China

Abstract

China's transport infrastructure distribution and its economic activities have largely the same pattern of spatial clusters. This paper aims to determine whether causal linkages exist between transport infrastructure investment and economic growth in China at national and regional levels. We examine causality in a panel cointegration and a Granger causality framework using time series data throughout the 1978–2008 period. The empirical findings show that in the long run, at the national level, there is unidirectional Granger causality from economic growth to transport infrastructure; at the regional level, there exists bidirectional causality in the affluent eastern region while the low-income central and western regions exhibit unidirectional Granger causality from economic growth to transport infrastructure. These results imply that an improvement in transport infrastructure alone is not sufficient for stimulating economic growth in the underdeveloped areas of China. To better realize the economic benefits brought by transport infrastructure, the Chinese government should pay serious attention to the development of complementary factors in the central and western provinces.