Contribution to productivity or pork barrel? The two faces of infrastructure investment

This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production–function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985–92 suggest that electoral concerns and influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. By contrast, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel.     

The effects of high-speed rail on air passenger transport in China

This study investigates the effects of high-speed rail (HSR) on China’s air passenger transport from the perspective of airports. The difference-in-differences approach is used with unbalanced panel data of 206 airports over the period from 2006 to 2015. Our estimation results found that the negative effects of HSR on the growth rate of China’s air passengers is both statistically and economically significant. However, these adverse effects are not catastrophic.     

Interregional infrastructure,competition for capital,and local public expenditure policies: Evidence from China's high-speed rail network

Interregional infrastructure promotes market integration and enhances the mobility of capital, thereby intensifying fiscal competition among local governments. Exploiting the expansion of China's high-speed rail (HSR) network as plausibly exogenous shocks, this study examines how Interregional infrastructure affects the fiscal competition among local governments. We find that after connecting with the HSR network, city governments tend to dedicate a lower proportion of public spending to consumption goods, which benefit immobile households, and invest more in productive inputs, which attract mobile firms. We also find that the negative effect of HSR connection on the proportion of consumption goods is more pronounced in peripheral cities than core cities because periphery cities face a larger increase in capital mobility due to the core–periphery effects of trade integration induced by HSR. Our findings indicate that the behavioural responses of local governments should be accounted for when assessing the social welfare of interregional infrastructure.     

交通基础设施、空间溢出与经济增长:来自中国的实证研究

This paper develops an empirical model to test the spatial spillover effects of transport infrastructure on economic growth. It uses spatial econometric techniques and provincial panel data of China from 1993 to 2004 to analyze the contribution of transport infrastructure to the economic growth of local province and its spatial spillover effects on the economic growth of other provinces. The main findings include: (1) Transport infrastructure and economic growth of China show an evident pattern of spatial clustering. They largely congregate in developed eastern coastal regions, forming a gradient gradually diminishing from east to west. (2) Output elasticity of local transport infrastructure is 0.106, between the values calculated by early researchers with time series data and panel data. (3) Spatial output spillovers from transport infrastructure are largely positive, but evidences of negative spatial spillovers are also found with population density spatial weights matrix model.      

Regional economic growth and the role of high-speed rail in China

Rapid development of High-speed railways (HSR) in China has attracted serious research interest. This paper proposes an endogenous economic growth model to explain how and why HSR may lead to faster economic growth and regional convergence in China using data from 285 cities in 2010–2014. TSLS estimation suggests that HSR has a powerful impact on urban economic growth and regional convergence. It suggests that HSR was a potent driver responsible for the sustainable and steady economic expansion of the Chinese regions in the aftermath of the world financial crisis.     

Roman roads to prosperity: Persistence and non-persistence of public infrastructure

In this paper, we explore the link between public transport infrastructure investments made during antiquity and the presence of infrastructure today; as well as the link between early infrastructure and economic activity, both in the past and in the present. We examine the territory under dominion of the Roman Empire at the zenith of its geographical extension (117 CE), and find a remarkable pattern of persistence showing that greater Roman road density goes along with (a) greater modern road density, (b) greater settlement formation in 500 CE, and (c) greater economic activity in 2010–2020. Exploiting a natural experiment, we find that persistence in road density and the strong link between early road density and contemporary economic development weaken to the point of insignificance in areas where the use of wheeled vehicles was abandoned and caravan trade routes replaced road-based trade from the first millennium CE until the late modern period. Studying channels of persistence, we identify the emergence of market towns during the early medieval period and the modern era as a robust mechanism sustaining the persistent effects of the Roman roads network. Our results contribute to a deeper understanding of the channels through which persistence in comparative development comes about.     

高铁开通与站点城市旅游业发展:“引擎”还是“过道”?

完善的交通基础设施网络是满足人民日益增长的旅游生活需求之重要前提。我国高铁快速发展,高铁开通是成为推动区域旅游发展的“引擎”,还是仅起到交通“过道”的作用,这需要通过有效的方法予以甄别。本文基于2003—2016年中国286个城市的面板数据,使用渐进型双重差分法评估了高铁开通对站点城市旅游业发展的影响。研究发现:控制年份、城市和剔除其他因素影响后,整体上,高铁开通对站点城市国内游客人数和游客总人数的增长具有正向的影响但并不显著,甚至有较弱的证据显示高铁开通平均降低站点城市大约5%的国内旅游收入和总收入,这一结果提示,对大多数站点城市而言,高铁仅作为城市的“过道”,没能成为拉动旅游业发展的“引擎”。对不同城市的异质性分析表明,高铁的旅游效应仅在五线城市表现显著,高铁开通可平均增加五线城市14 82%的国内游客人数。机制分析显示,高铁开通对影响旅游业发展的城市规模效应、结构效应和技术效应都并非是简单的正向传导路径,而是表现为正、负向影响并存的传导模式,从而导致了高铁开通的旅游效应不显著。     

High-speed rail and inventory reduction: firm-level evidence from China

Using a balanced panel of manufacturing firms from China between 2007 and 2013, we estimate that being connected to a high-speed rail (HSR) system leads to 9.5% reduction in local firms’ input inventory spending. The effect is stronger for downstream industries and private enterprises. A back-of-envelope calculation suggests that each dollar of HSR investment reduces input inventory stock by 12 cents, which is significantly larger than the effects found in previous studies based on highway or road investment. Declines in transportation and communication cost, as well as agglomeration effect, are identified as plausible mechanisms. Our findings reveal a micro channel through which improved transport infrastructure brings about economic gains, and contribute to the cost-benefit assessment of HSR investment.     

Investment in trade facilitating infrastructure: A political-economy analysis

This paper analyzes public investment in infrastructure that facilitates international trade. It considers a world consisting of small open economies that face transport costs for exporting or importing a particular good. Transport costs can be lowered by an improvement in transport infrastructure. National governments non-cooperatively decide about their respective country's investment level. Governments' preferences are assumed to be biased in favor of producers' interests with consequences for equilibrium investments: Exporting countries, whose producers benefit from a transport cost reduction, spend more for infrastructure than importing countries, whose producers are protected by transport costs from foreign competition. This outcome is inefficient, and governments have an incentive to cooperate internationally. The paper also incorporates bilateral trade with two goods that benefit from infrastructure improvements as well as trade that results from offshoring.     

The hidden value of air transportation infrastructure

Air transportation is a key strategic asset in that it provides access to markets and thereby enables the economic development of nations. Thus, in order to maintain their competitiveness in a global economy, countries must invest in air transportation infrastructure to ensure their ability to meet current and future demand for aviation services. The objective of this paper is to develop and illustrate a methodology for evaluating the strategic value of air transportation infrastructure, in particular the benefits associated with the ability to react quickly to changes in the market. The hypothesis is that by recognizing and taking advantage of this strategic value, it may be possible to design better policies for aviation infrastructure delivery.The methodology developed here uses system dynamics to model different strategies for infrastructure delivery. These strategies are defined by three variables: the amount of capacity increase, the time to deliver the capacity and the congestion threshold that triggers the need for capacity delivery. Monte Carlo simulation is used to take into account multiple sources of uncertainty. The model shows that a strategy of capacity delivery based on small increments and short response times can yield more benefits than strategies that consider large capacity increases and long response times. Furthermore, in the specific airport example considered here, it was found that a congestion threshold of 75% should be the trigger for capacity enlargements if strategies based on small capacity increments and 1 or 5 years to increase capacity are considered. The lesson for decision-makers is that congestion delays must be addressed with foresight.     

Analysis of factors influencing the development of transport infrastructure until the year 2030 — A Delphi based scenario study

In this paper, we present the findings of a web-based real-time Delphi study concerning the factors which will influence the future development of the transport infrastructure until the year 2030. Intensifying globalization, increased urbanization, ongoing shortages in public finances, and the requirements of a more demanding and growing world population are some of the challenges, which global transport will face. This research identifies, assesses, and integrates long-range developments of various factors, such as supply and demand, financing, competitiveness, and sustainability, which will affect the future of the transport industry and its infrastructure. Results are presented in a final probable scenario, which is divided into four different scenario aspects. Moreover, managerial and governmental implications for strategy and policy development are discussed.     

Transport infrastructure,growth and persistence: The rise and demise of the Sui Canal

This paper investigates the effect of transport infrastructure on the spatial distribution of population over two millennia. Focusing on the Sui Canal, one of history's greatest infrastructure projects, we show that its completion in the 7th century CE led to a strong increase in population concentration along the newly established transport artery. We exploit the fact that large parts of the canal fell into disrepair after the 12th century to analyze the persistence of this effect. We find that in 2010, more than 800 years after the Sui Canal fell into disuse, regions once directly connected to the canal are still more populous than areas that never had access. However, this population concentration is not mirrored in economic development. GDP per capita is lower in areas that lay along the course of the canal. One potential explanation for this finding is a change in the value of locational fundamentals as well as a shift in investments to the benefit of coastal regions since the initiation of the Open Door Policy in 1978.     

Institutions, infrastructure, and economic growth

This paper develops a structural model of infrastructure and output growth that takes account of institutional and economic factors that mediate in the infrastructure–GDP interactions. Cross-country estimates of the model indicate that the contribution of infrastructure services to GDP is substantial and, in general, exceeds the cost of provision of those services. The results also shed light on the factors that shape a country's response to its infrastructure needs and offer policy implications for facilitating the removal of infrastructure inadequacies.     

Infrastructural change and secular economic development

Long-term economic development is determined by changes to the infrastructure, especially material and non-material infrastructural networks that link agents in different locations. The infrastructure consists of the slowly changing, collective arena that supports production, exchange, and consumption, such as the built environment, transport networks, and institutions. In the short run the infrastructure can be regarded as fixed. Changes to the infrastructure are under normal conditions small enough to be disregarded by producers and consumers. With the creation of a critical link of a network, there will however be a revolutionary restructuring of the arena. Critical links are here defined as additions to infrastructural networks that create opportunities for new information and transport flows between previously unconnected regions. Such a revolutionary restructuring of infrastructural networks has been called a logistical revolution. Certain institutional pre-conditions are necessary for a logistical revolution, while the creation of a critical link is both a necessary and a sufficient condition. This paper discusses the three logistical revolutions that occurred in the 13th century, around 1600, and in the 19th century, which each had crucial similarities with the current “information revolution.”     

Does the new digital infrastructure improve total factor productivity?

Improving total factor productivity (TFP) is essential to achieving high-quality and sustainable economic development. The existing literature mainly focuses on the impact of traditional infrastructure on TFP but generally ignores the role of new digital infrastructure in TFP and does not test impact mechanisms and whether there is heterogeneity in effects. Using panel data of 30 regions in China from 2006 to 2017, this paper analyzes the impact of new digital infrastructure on TFP and its mechanisms. The results are as follows: (1) New digital infrastructure can significantly improve regional TFP. After the robustness test, the results still support the findings. (2) New digital infrastructure can promote technological innovation, optimize factor allocation, and achieve economies of scale, thus improving TFP. (3) Further analysis shows that the positive effect of new digital infrastructure on TFP shows significant heterogeneity. In regions with high economic development levels, high research and development ( R&D) levels, and high traditional infrastructure development levels, the positive effect of new digital infrastructure on TFP is more obvious. These findings not only enrich the literature on digital infrastructure and economic growth but also serve as a reference for governmental departments as they optimize their strategy for developing digital infrastructure and realizing sustainable economic development.     

The nexus between infrastructure (quantity and quality) and economic growth in Sub Saharan Africa

This paper examines the growth effects of infrastructure stock and quality in Sub Saharan Africa (SSA). While previous studies established that the poor state of infrastructure in SSA slows economic growth, there is little evidence on infrastructure quality and a robust analysis on the causal links between infrastructure and economic growth. Using principal components analysis to cluster different infrastructure measures and examining the infrastructure-growth nexus in a Generalised Method of Moments while accounting for heterogeneity in a panel setting, our results reveal strong evidence of a positive effect of infrastructure development on economic growth with most contribution coming from infrastructure stock. The quality-growth effect is weak, thus giving credence to the combined effects of infrastructure stock and quality on growth, especially in regions with moderately high quality, and smaller in those with poorer quality. However, the long-term quality effect is higher than the short-term. Among the disaggregated infrastructure components, electricity supply exerted the greatest downward pressure on growth in SSA. Lastly, we find evidence for a unidirectional causality from aggregate infrastructure to growth. A number of policy implications are discussed.     

Infrastructure: What Is Needed and How Do We Pay for It?

Claims of an infrastructure crisis lack definition, and fail to provide evidence that investment projects that would generate an economic return, including both private and social benefits, are not being funded. This paper shows how setting economic prices for energy, water, transport and communications will provide a better guide to the optimal amount of future infrastructure investment than the likely responses by proponents of an alleged infrastructure crisis.     

Energy demand in the transportation sector of Mexico

This paper report results of an analysis of the demand for energy in the Mexican transport sectors, focusing on the railroad, air transport and motor vehicle modes. The approach is an econometric one with emphasis placed on the structure for each mode. For two of the modes a two-stage approach is employed where in the first stage demands for services from the particular mode are modeled, and in the second stage demand is treated as a derived demand from these transport services. For the motor vehicle mode, gasoline demand is considered as the product of gasoline consumption per vehicle times the total number of vehicles, and then these components are related to economic and structural variables. Diesel demand of motor vehicles is modeled in a more reduced from approach. The principal finding is that changes in income play a more important role in affecting energy demand than do changes in energy prices, especially in the railroad and air transport sectors. For the gasoline and diesel fuel demand in the monitor vehicle sector, however, price is of substantial importance.     

Regional infrastructure and firm investment: theory and empirical evidence for Italy

The authors model the channels through which public expenditure on infrastructure influences firm value and shapes its investment decisions via both adjustment costs and marginal profitability of capital. The authors test these hypotheses using a large panel of Italian firms. Empirical results show that infrastructure interacts with revenues and costs in shaping firm??s capital profitability and influences its adjustment costs. Finally, the authors find that infrastructure expenditure contributes to the reduction of the economic gap between the North and the South of Italy. These effects vary across regions and sectors.     

Economic impact assessment of mega infrastructure pipeline projects

The economic development features for the decades after the Second World War provide evidence that investments to new infrastructures are a key driver in strengthening the national economy and enhancing nation’s productivity, as it creates economic benefits and additional income. However, the decision for fund allocation and investments in mega infrastructure pipeline projects often must be made in conditions that are much more fraught with uncertainty. The key question in such decisions is if the economic impact caused by the new project could be able to essentially boost the economy by creating new jobs and generating new income on one hand; and which are the business sectors expected to archive the benefits of this investment. This article deals with the estimation of the mega infrastructure pipeline project economic effects in economy. The methodological framework is based on input–output approach providing quantitative estimations about the economic impact of the project in terms of new income and jobs. The numerical application deals with the assessment of a cross-border crude oil pipeline project, connecting the ports of Burgas (Bulgaria) and Alexandroupolis (Greece), establishing a new transportation corridor for the crude oil from Black Sea to Southeast Mediterranean.