Spillovers from transport infrastructures onto firm productivity: An analytical and empirical study

Although issues about the economic spillovers from transport infrastructure have been discussed and debated for decades, a great deal of controversy concerning the direction and magnitude of the economic effects of transport infrastructure remains, and the empirical evidence of those effects in emerging economies is still insufficient. In this study, based on a sample of Chinese manufacturing firms during the period 1998–2007, we employed a method combining the difference‐in‐differences approach with the propensity scoring matching technique to research the effects of improvements in transport infrastructure on firm productivity. With highways used as a typical example of transport infrastructure, the results suggested that a connection to highways boosted firm productivity by an average of 0.043, or approximately 0.74% of the sample mean. Moreover, this study provided evidence that the effects of improvements in transport infrastructure on firm productivity were stronger in industries producing nondurable goods and driven by an increase in firm innovation. This study’s findings contribute to a reconciliation of the controversy concerning the economic effects of transport infrastructure and enrich the empirical evidence of that effect in emerging economies.