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Growth and distributive effects of public infrastructure investments in China

Author

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  • Yumei Zhang
  • Xinxin Wang
  • Kevin Chen

Abstract

Public infrastructure investments are seen as one of the key engines of economic growth in China. Yet, there is little quantitative evidence on the growth and distributive effects of public infrastructure investments (PII) in China. This paper applies a macro-micro simulation method, to assess the effects of PII on the national economy using an inter-temporal dynamic CGE model and its distributive effects on individual households using a microsimulation. The results showed that higher PII substantially raises productivity in all sectors and income in all household categories. Higher PII also helps reduce poverty and modestly improves equality. The results not only suggest that increasing PII can drive economic growth in China, but also that it is a useful strategy for the promotion of inclusive growth. In particular, China could consider investing more in rural infrastructure to reduce inequality between rural and urban households in the future.

Suggested Citation

  • Yumei Zhang & Xinxin Wang & Kevin Chen, 2012. "Growth and distributive effects of public infrastructure investments in China," Working Papers MPIA 2012-07, PEP-MPIA.
    • Handle: RePEc:lvl:mpiacr:2012-07
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    Cited by:

    1. Wang, Xinxin & Chen, Kevin & Huang, Zuhui & Robinson, Sherman, 2013. "Demographic Transition and Income Distribution in China: CGE Modeling with Top-Down Micro-Simulation," Conference papers 332353, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. International Labour Organization., 2015. "Global employment trends for youth 2015 : scaling up investments in decent jobs for youth," Global Employment Trends Reports 994891803402676, International Labour Office, Economic and Labour Market Analysis Department.
    3. Bhatt, Vipul & Liao, Mouhua & Zhao, Min Qiang, 2023. "Government policy and land price dynamics: A quantitative assessment of China’s factor market reforms," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    4. Yumei Zhang & Yue Zhan & Xinshen Diao & Kevin Z. Chen & Sherman Robinson, 2021. "The Impacts of COVID‐19 on Migrants, Remittances, and Poverty in China: A Microsimulation Analysis," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(6), pages 4-33, November.
    5. Son Ngoc Chu & Ligang Song, 2015. "Promoting Private Entrepreneurship for Deepening Market Reform in China: A Resource Allocation Perspective," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(1), pages 47-77, January.
    6. Ying Wu & Hong Yao, 2015. "Income Inequality, State Ownership, and the Pattern of Economic Growth – A Tale of the Kuznets Curve for China since 1978," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 165-180, June.
    7. Wang, Xinxin & Chen, Kevin & Huang, Zuhui, 2013. "The Impact of China's Demographic Transition on Economic Growth and Income Distribution: CGE Modeling with Top-Down Micro-Simulation," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151276, Agricultural and Applied Economics Association.
    8. Emerta Aragie & Jean Balié, 2021. "Public spending on agricultural productivity and rural commercialization: A comparison of impacts using an economy‐wide approach," Development Policy Review, Overseas Development Institute, vol. 39(S1), pages 21-41, August.
    9. Vipul Bhatt & Mouhua Liao & Min Qiang Zhao, 2019. "Government Policy and Land Price Dynamics: A Quantitative Assessment of China's Factor Market," Working Papers 2019-07-03, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.

    More about this item

    Keywords

    Public Infrastructure Investment; Inclusive Growth; Intertemporal Dynamic CGE Model; Microsimulation; China;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • D30 - Microeconomics - - Distribution - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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