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Does Investment in National Highways Help or Hurt Hinterland City Growth?

Nathaniel Baum-Snow, J. Vernon Henderson, Matthew A. Turner, Qinghua Zhang, Loren Brandt

NBER Working Paper No. 24596
Issued in May 2018
NBER Program(s):International Trade and Investment

We investigate the effects of the recently constructed Chinese national highway system on local economic outcomes. On average, roads that improve access to local markets have small or negative effects on prefecture economic activity and population. However, these averages mask a distinct pattern of winners and losers. With better regional highways, economic output and population increase in regional primates at the expense of hinterland prefectures. Highways also affect patterns of specialization. With better regional highways, regional primates specialize more in manufacturing and services, while peripheral areas lose manufacturing but gain in agriculture. Better access to international ports promotes greater population, GDP, and private sector wages on average, effects that are probably larger in hinterland than primate prefectures. An important policy implication is that investing in local transport infrastructure to promote growth of hinterland prefectures has the opposite effect, causing them to specialize more in agriculture and lose economic activity.

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Document Object Identifier (DOI): 10.3386/w24596

Published: Nathaniel Baum-Snow & J. Vernon Henderson & Matthew A. Turner & Qinghua Zhang & Loren Brandt, 2018. "Does Investment in National Highways Help or Hurt Hinterland City Growth?," Journal of Urban Economics, .

 
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