A study on the impact of transportation infrastructure on the spatial distribution of industrial activities

【Author】

XIE Chengyang;WANG Minghui

【Institution】

School of Economics & Management, Southeast University;Development Research Center of the State Council

【Abstract】

In China, the spatial structure of industrial activities is undergoing profound changes. Promoting the rational distribution of industrial activities among regions in accordance with objective laws is an essential prerequisite for promoting effective resource allocation and coordinated regional development, which is of great significance to the transformation of China’s economy from rapid growth to high-quality development. Undoubtedly, transportation infrastructure (TI) plays a key role in promoting the distribution as it links cities together and directly influences the flow of production factors and industrial products. Considering the practical implications, we aimed to explore the relationship between TI and the spatial distribution of industrial activities. In this paper, an empirical study which employs a threshold model and uses panel data for China covering 275 cities over the period from 2004 to 2016 was carried out to discuss how intra-regional and inter-regional TI affect the spatial distribution of industrial activities, respectively. Empirical results are as follows (1) Regardless of the economic development level, improving intra-regional TI has led more industrial activities to locate in this region. This part of result is the same as the conclusion of the free capital (FC) model. (2) Improving inter-regional TI has not magnified the siphoning effect of developed cities on less developed ones. Instead, it has led industrial activities to leave developed cities, bringing decrease in the industrial share of developed cities and increase in that of less developed cities. This result is to some degree different from what is drawn from the FC model and some other empirical studies. This paper analyzed the economic growth and industrial structural changes in developed cities whose industrial shares have decreased during the sample period, and reconsidered the influence of inter-regional TI, believing that it is not inter-regional TI but the returns between regions that determines the flow direction of industrial activities. Industrial activities always tend to flow into areas with higher returns after subtracting transportation costs. If the rate of return on industrial activities is higher in developed cities (less developed cities), improving inter-regional TI will accelerate the transfer of industrial activities to developed cities (less developed cities). In this process, social production factors will be better allocated. This paper further reviewed the parameter setting and derivation process of the FC model, and found that the model does not include the dispersion force of economic development. Under the setting of the FC model, developed cities do not have any negative factors affecting industrial activities, and always have advantages compared with less developed cities. Therefore, when interregional TI improves (the cost of interregional trade decreases), capital will naturally be more inclined to choose developed cities. It follows that better inter-regional TI is always associated with the migration of industrial activities from less developed cities to developed ones. Based on the above conclusions, this paper puts forward suggestions on the development direction of TI from the perspective of optimizing resource allocation. Building on existing studies, this paper makes the following contributions. (1) It improves understanding of the effects of inter-regional TI on the distribution of industrial activities; and (2) it identifies the limitations of the FC model in practical application. Further works related to this paper could be directed to the effects of inter-regional transportation infrastructure on a region’s welfare.

【Keywords】

intra-regional transportation infrastructure;inter-regional transportation infrastructure;spatial distribution of industrial activities

References

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Springer Journals Database

Total: 22 articles

  • [1] Lou Hong (Department of Treasury,Ministry of Finance,P.R.C), Public Investment Policy in Long-run Economic Growth——General Congestion Public Infrastructure in Long-run Growth Model, Economic Research Journal,
  • [2] ZHANG Xue-liang (The Institute of Finance & Economics Research,Shanghai University of Finance and Economics,Shanghai 200433,China), Regional Comparative Analysis on the Relationship between Transport Infrastructure and Economic Growth in China, Journal of Finance and Economics,
  • [3] HU An-gang,LIU Sheng-long(Center for China Study of Tsinghua University, Beijing 100084, China), Transportation,Economic Growth and Spillover:Conclusion Based on Spatial Econometrics, China Industrial Economics,
  • [4] LIU Sheng-long,HU An-gang(Center for China Study,Tsinghua University,Beijing 100084,China), Transport Infrastructure and Economic Growth: Perspective from China’s Regional Disparities, China Industrial Economics,

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