Between 1990 and 2010, China constructed an extensive modern road network including a national system of limited access highways. This study investigates the eﬀects of this network on GDP, population and GDP per capita in Chinese prefectures.
The analysis uses 3 main approaches:
The first is based on a structural model of Ricardian trade – a classic model introduced by 18th century British economist David Ricardo to explain the pattern of, and gains from, trade in terms of comparative advantage – that provides an explicit description of the general equilibrium eﬀects of changes in the highway network.
The second involves reduced form estimates of the casual eﬀects of highways, which accommodates the non-random assignment of highways across locations.
The third approach is a hybrid of the ﬁrst two.
The structural model suggests that access to domestic markets, but not to export markets, increases economic output. The reduced form estimates suggest the opposite conclusion and also point to the importance of highways in the rise of regional primate cities. These reduced form ﬁndings are consistent with export-driven growth policies and central or provincial government policies favoring regional primate cities. In addition to informing policy, the results of this study raise concerns about the use of quantitative results from Ricardian trade models in isolation for understanding how and the extent to which infrastructure drives regional growth.
Baum-Snow, N.; Henderson, V.; Turner, M.A.; Zhang, Q.H.; Brandt, L. Highways, Market Access, and Urban Growth in China. International Growth Centre (IGC), London, UK (2016) 56 pp.