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.
Keywords
Acknowledgements
The authors thank participants of the Joint Conference of Chinese Economics Society Australia and Rural Development Institute of Chinese Academy of Social Sciences in Beijing on December 11-12, 2014 for their comments and suggestions. Zhiyang Wang thanks Fujian Social Science Program for the support via the project, titled “Fiscal and Taxation Policies to Promote Development of Main Functional Areas in Fujian Province” (No. 2013B197). All errors remain the authors’.
Citation
Wang, Z. and Sun, S. (2016), "Transportation infrastructure and rural development in China", China Agricultural Economic Review, Vol. 8 No. 3, pp. 516-525. https://doi.org/10.1108/CAER-09-2015-0115
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited