The Temporal and Spatial Effect of Highways on China’s Economic Growth

Xiugen Mo, Guangqing Chi, Charles Campbell
(Mississippi State University, Mississippi State, MS 39762, USA)

Abstract: Infrastructure investment is currently enjoying great popularity among government as a strategy to handle the recent worldwide economic recession. However, the relevant literatures have yet to come to a consistent agreement on how infrastructures, especially that of transportations, impact economic growth. This paper investigates the effects of highway infrastructure on economic growth using spatial regression models estimated from the county data of Guangxi Zhuang Autonomous Region (GXZAR) in China from 1993-2007. The results indicate that relationships between initial highway infrastructure and economic growth can be positive, negative, or negligible. The spatial effects are also inconsistent. Impacts are stronger in near short-term but diminishing over times. We conclude that the highways are a necessary, but not a sufficient condition for economic growth. The highway impact depends on other factors as well. Improving infrastructure alone could not create a continued economic growth.

Key words: growth; spatial; infrastructures; roads; China

JEL codes: O18, R42, R12, R53