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The role of infrastructure in China’s regional economic growth

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  • Shi, Yingying
  • Guo, Shen
  • Sun, Puyang

Abstract

This study investigates the relationship between infrastructure capital and China's regional economic growth for the period 1990–2013. Four types of infrastructure are considered: electricity generating capacity, roadway, railway, and telecommunications. Using a vector error correction model, we find mixed support across time period and region for the contribution of infrastructure investment to economic development. With regard to road construction in lagging regions in particular, the impact appears to have become negative under a program of ramped up efforts. The results resonate with the theoretical literature on the inverse U-shaped relationship between infrastructure investment and growth which posits a “crowding-out effect” of private capital when infrastructure investment becomes too dominant.

Suggested Citation

  • Shi, Yingying & Guo, Shen & Sun, Puyang, 2017. "The role of infrastructure in China’s regional economic growth," Journal of Asian Economics, Elsevier, vol. 49(C), pages 26-41.
    • Handle: RePEc:eee:asieco:v:49:y:2017:i:c:p:26-41
    DOI: 10.1016/j.asieco.2017.02.004
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