Transportation infrastructure and regional resource allocation

Abstract

The crux of China's economic growth decline lies in the spatial misallocation of resources, with administrative forces impeding the market flow of production factors and leading to a deterioration in the efficiency of resource allocation. Therefore, China is strongly promoting the implementation of a unified market to break the restrictions imposed by administrative forces on the flow of production factors, give full play to the decisive power of the market in terms of resource allocation, and promote market integration and the cross-regional reallocation of production factors. In this study, we verified the micro effects of transportation accessibility on regional resource allocation efficiency and their internal mechanisms using theoretical and empirical analyses based on data from 282 cities in China from 2005 to 2021. We found that improved transportation infrastructure helps improve regional resource allocation efficiency and generates positive spatial spillovers to neighboring regions. Regarding intrinsic mechanisms, an improved transportation infrastructure can improve regional resource allocation efficiency by inducing industrial agglomeration or alleviating market segmentation. Heterogeneity analysis revealed that improved transportation infrastructure makes the resource allocation efficiency of eastern cities more dependent on market integration effects. In contrast, central and western cities depend more on industrial agglomeration. Meanwhile, transportation infrastructure optimizes resource allocation better in highly compact cities.