Transportation infrastructure and rural development in China

Abstract

Purpose The infrastructure investment is one important source of economic growth in China in the past three decades. However it is not clear to what extent such investment affects development in rural area. The purpose of this paper is to explore this impact both conceptually and quantitatively, and draw policy implications from the empirical exercise. Design/methodology/approach The authors first describe the conceptual link between the transportation infrastructure and rural development, which motivates the empirical model. Then by utilizing an autoregressive distributed lag model, the authors estimate both the short- and long-run impacts of the transportation infrastructure on rural development, in terms of cereal yield and per capita net income of rural households. Findings The authors find that investment in transportation infrastructure positively affects rural development in China. In terms of cereal yield, a 1 percent increase in the road infrastructure (road length) leads to around 0.05 percent increase in cereal yield in the short-, and around 0.19 percent increase in the long-run. In terms of the per capita net income of rural households, a 1 percent increase in the road infrastructure results in around 0.14 percent increase in the short-, and its long-run impact is not statistically significant. The positive impacts lend supports to promote investment in the transportation infrastructure. To this end, in addition to the government funding, the participation of private capital can also be promoted through a number of channels, such as the build-operate-transfer, public-private partnership, and establishment of infrastructure investment bank. Originality/value This study evaluates the impacts of transportation infrastructure on rural development in China. Despite of the importance of infrastructure and rural development, there is a lack of study on the interaction between them. This paper intends to fill in this gap. In addition, implications drawn in this exercise can benefit policy makers not only in China, but also in other developing countries.

Factors that Affect Farmland Conversion in China and Indonesia

“…Finally, the RAI variable has a slightly strong negative role in stimulating farmland conversion in the first delayed value (t -1) in China. This result getting a different result with study did by Wang and Sun (2016) which found that investment in transportation infrastructure affects rural development in China positively. Regarding cereal yield, a 1 percent increase in the road infrastructure (road length) leads to around 0.05 percent increase in cereal yield in the short-, and approximately 0.19 percent increase in the long-run.…”

The Effect of Public Infrastructure on Cost Structure and Performance of Chinese Provinces*

“…Based on state-owned and non-stateowned manufacturing enterprise data, Li and Li (2013) employ an economic order quantity model and find that regional road investment contributed 11.5 percent to firms' productivity growth on average during the period 1998-2007. Applying an autoregressive distributed lag model on rural household data from 1980-2013, Wang and Sun (2016) find that transportation infrastructure has positive effects on regional development. Finally, Ansar et al (2016) find weak evidence of a profitable effect of infrastructure investment.…”

Rural Residents’ Perception of Construction Project Delays in Pakistan

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