Infrastructure’s contribution to China’s total factor productivity growth

LIU Binglian 1,2, WU Peng1and LIU Yuhai 1

1School of Economics, Nankai University
2School of Economic and Social Development Research, Nankai University

Abstract:

This paper analyzes the relationship between transportation infrastructure and total factor productivity (TFP) growth in China with the spatial econometrics of panel data. The results of the empirical study show that there is an obvious spatial autocorrelation among China’s interlocal TFP from 1997 to 2007. Transportation infrastructure has a positive impact on TFP in China; the addition of railway and road infrastructure caused China’s TFP to increase 11.075 percentage points from 2001-07, making up 59.10% of TFP’s amplification. Freeways and first-class road infrastructure’s positive impacts are more obvious; direct effects are only 25.7% while indirect effects are 74.3%. Rail infrastructure had persistent positive impacts on China’s TFP from 2001-07; freeway infrastructure had persistent positive impacts on China’s TFP from 1997-2007, but other road infrastructure has not shown these persistent effects.

Key Words:

Transportation infrastructure, total factor productivity, stochastic frontier analysis, spatial panel data model, spatial spillover

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