IMF Working Papers Volume 2018 Issue 276: Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China (2018)

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Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China

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Yang Yang

Yang Yangnull

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Series:: IMF Working Papers

Volume/Issue:: Volume 2018: Issue 276

Publication Date:: 11 Dec 2018

DOI:: https://doi.org/10.5089/9781484389584.001

ISBN:: 9781484389584

ISSN:: 1018-5941

Pages:: 63

Keywords:: WP; market access; dependent variable; transportation cost; Transport infrastructure; trade; highway; productivity; China; firm TFP; logistics company; census data; production efficiency; Transportation; Total factor productivity; Infrastructure; Global; City productivity growth; evidence from China; sectoral reallocation; C. firm Productivity; Manufacturing

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2018: Issue 276

Language:: English

Publication Date:: 11 Dec 2018

DOI:: https://doi.org/10.5089/9781484389584.001

ISBN:: 9781484389584

ISSN:: 1018-5941

Pages:: 63

Keywords:: WP; market access; dependent variable; transportation cost; Transport infrastructure; trade; highway; productivity; China; firm TFP; logistics company; census data; production efficiency; Transportation; Total factor productivity; Infrastructure; Global; City productivity growth; evidence from China; sectoral reallocation; C. firm Productivity; Manufacturing

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper examines the impact of highway expansion on aggregate productivity growth and sectoral reallocation between cities in China. To do so, I construct a unique dataset of bilateral transportation costs between Chinese cities, digitized highway network maps, and firm-level census. I first derive and estimate a market access measure that summarizes all direct and indirect impact of trade costs on city productivity. I then construct an instrumental variable to examine the causal impact of highways on economic outcomes and the underlying channels. The results suggest that highways promoted aggregate productivity growth by facilitating firm entry, exit and reallocation. I also find evidence that the national highway system led to a sectoral reallocation between cities in China.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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