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The Role of Infrastructure Capital in China’s Regional Economic Growth

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  • Shi, Yingying

Abstract

This paper investigates the role of infrastructure capital in China’s regional economic development during 1990 to 2009 in a neoclassical economic growth model. Four types of infrastructure capital are discussed; electricity, road, rail, and land-line telephone. The results support a positive role of infrastructure in improving economic wellbeing in China. It shows that infrastructure has contributed to the convergence among China’s provinces. However, declining growth momentum from rapid increase of road infrastructure, in particular for the Western region, suggests that road development in the region has been growing too fast. The results counter the conventional wisdom of “road leads to prosperity” widely accepted among national and local governments in China. Thus, the seemingly productive infrastructure capital, when invested beyond a proper level or speed, will become unproductive. The results resonate with the theoretical literature on the inverse U shaped growth impact of infrastructure capital and the dominant “crowding out” of private capital if there is too much infrastructure. They also address the puzzle in the current literature debates as to the direction and magnitude of the growth impact of infrastructure capital.

Suggested Citation

  • Shi, Yingying, 2012. "The Role of Infrastructure Capital in China’s Regional Economic Growth," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126547, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae12:126547
    DOI: 10.22004/ag.econ.126547
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    References listed on IDEAS

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    Cited by:

    1. Presbitero, Andrea F., 2016. "Too much and too fast? Public investment scaling-up and absorptive capacity," Journal of Development Economics, Elsevier, vol. 120(C), pages 17-31.
    2. Shahbaz, Muhammad & Khan, Saleheen & Tahir, Mohammad Iqbal, 2013. "The dynamic links between energy consumption, economic growth, financial development and trade in China: Fresh evidence from multivariate framework analysis," Energy Economics, Elsevier, vol. 40(C), pages 8-21.
    3. Hao, Yu & Wang, Ling-Ou & Lee, Chien-Chiang, 2020. "Financial development, energy consumption and China's economic growth: New evidence from provincial panel data," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 1132-1151.
    4. Gökhan DEMİRTAŞ & Ebuzer AKSEL, 2018. "Bölgesel Kalkınmada Kamunun Rolü: Türkiye Üzerine Ampirik Bir AnalizAbstract: The aim of this study is to analyze the effect of public investments and investment incentives on regional development in ," Sosyoekonomi Journal, Sosyoekonomi Society.

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    Keywords

    International Development; Production Economics; Public Economics;
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