Chinese Roads in India: The Effect of Transport Infrastructure on Economic Development

Alder, Simon

doi:10.2139/ssrn.2856050

Cited by 67 publications

(73 citation statements)

References 45 publications

(72 reference statements)

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“…3 Estimating and calibrating new-economic-geographic models, Roberts et al (2012) and Bosker et al (2018) suggest that the expressway expansion does not reduce disparity across prefectures in real income and urbanization in the 2000s. 1 For examples, see Fernald (1999), Chandra and Thompson (2000), Holl (2004), Baum-Snow (2007), Michaels (2008), Datta (2012), Duranton and Turner (2012), Duranton et al (2014) , Donaldson and Hornbeck (2016), Frye (2016), Ghani et al ( 2016), Jaworski and Kitchens (2016), Alder (2017), Aggarwal (2018), Asher and Novosad (2018), Okoye et al (2019), and Donaldson (forthcoming). Notable examples that focus on China, besides the ones that will be discussed below, include Banerjee et al (2012), Zheng and Kahn (2013), Qin (2017), and Alder and Kondo (2018).…”

Section: Position In the Literaturementioning

confidence: 99%

Expressways, GDP, and the environment: The case of China

Xie

Zhang

2020

Journal of Development Economics

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In a matched difference-in-differences setting, we show that China's expressway system helps poor rural counties grow faster in GDP while slowing the rich rural counties down, compared with their unconnected peers. This heterogeneity is not driven by factors about initial market access, factor endowments, or sectoral patterns, but is consistent with the Chinese government's development strategy that relatively more developed regions prioritize environmental quality over economic growth, while poor regions pursue the opposite. We further investigate the environmental outcomes and find that expressway connection indeed makes poor counties adopt dirtier technologies, host more polluting firms, and emit more pollutions, contrary to what happens to the rich connected counties. These results imply that recognizing the GDP-environment trade-off can help understand the full implications of infrastructure investment and other development initiatives.Keywords: transport infrastructure; pollution haven hypothesis; home market effect; political economy of the environment JEL Codes: O18, O13, Q56, H54, R11 This is the Pre-Published Version including the ones based on comparative advantage (e.g. the pollution haven hypothesis as in Copeland and Taylor, 1994; survey by Copeland and Taylor, 2004) and the ones based on increasing returns to scale (e.g., the home market effect as in Krugman, 1980Krugman, , 1991Helpman and Krugman, 1985;Faber, 2014). A closer examination reveals that the heterogeneous impacts of expressway connection across initial income levels cannot be explained by a rich set of variables that are commonly used to indicate the relevance of these theories, such as the initial sectoral pattern in the local economy, endowments of land, population, and capital, and the distance from the focal county to its closest metropolitan city. We thus infer that the impact heterogeneity across different initial income levels is likely to be driven by factors that could have been largely overlooked by existing discussions.To reconcile our empirical findings, we emphasize one factor that is especially relevant: the environmental concern of local governments. In many developing and developed countries, this concern is prominent: evidently, pollution is usually viewed as a necessary input in economic production (e.g., Pethig, 1976), and society needs to maintain a subtle balance between the environment and economic growth (e.g., Arrow et al., 1995). In our research context, the State Council of China (2005) explicitly required the rich regions to prioritize improving environmental quality, while directing the poor areas to promote industrialization and urbanization. It is thus possible that lower trade cost brought by expressways would help a poor economy enjoy higher GDP at the cost of the environment, while helping a rich economy to sacrifice more GDP for better environmental quality.We then examine this possibility by analyzing county-level panel data of local polluting emissions for the same period. We find that rich counties...

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Section: Position In the Literaturementioning

confidence: 99%

Expressways, GDP, and the environment: The case of China

Xie

Zhang

2020

Journal of Development Economics

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“…18 Economic geography models of trade include both "new economic geography" models (Fujita, Krugman, & Venables, 1999;Krugman, 1991aKrugman, , 1991b and Ricardian models of internal trade of the Eaton-Kortum (2002) variety. Examples of papers that are motivated by a NEG model include Roberts et al (2012), while Costinot et al (2011), Donaldson and Hornbeck (2016), Alder (2015), and Alder et al (2017) are examples of papers motivated by an Eaton-Kortum style Ricardian trade model. subnational regions are evaluated against those of a set of comparison regions before and after the occurrence of the infrastructure investment.…”

Section: Methodsmentioning

confidence: 99%

Transport corridors and their wider economic benefits: A quantitative review of the literature

Roberts¹,

Melecký

Bougna

et al. 2019

Journal of Regional Science

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Transport corridors can generate both wider economic benefits (WEBs) and costs through their effects on diverse development outcomes. To advance understanding of how corridors could generate WEBs, this paper undertakes a quantitative review and meta‐analysis of the literature that estimates the impacts of large transport infrastructure projects. The analysis finds that characteristics of individual studies and the design of the transport infrastructure influence estimated benefits. It also shows that, on average, while corridor interventions tend to benefit economic welfare and equity, they often detrimentally impact the environment. To mitigate trade‐offs, policymakers can consider using complementary interventions.

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“…This brute force algorithm can, however, only be used for small economies with a limited number of locations, as the number of combinations 2 n(n−1)/2 explodes rapidly. Alder (2019) We also compare the performance of our algorithm to Alder (2019), who proposes another heuristic algorithm in a spatial economic model. Since the Alder algorithm is discrete in nature (locations are connected or not, and there is no intensive aspect to infrastructure investments), there is no obvious way to perform the comparison.…”

Section: D2 Numerical Evaluation Of the Nonconvex Algorithmmentioning

confidence: 99%

“…A caveat in the first approach is that the first part of the algorithm is constrained by the discreteness of investments. We thus devise a new algorithm that combines the appealing aspects of Alder (2019) with our continuousinvestment approach which relies on differentiation and on the simulated annealing to escape local optima. We refer to this second approach as "Hybrid Alder-FS".…”

Section: D2 Numerical Evaluation Of the Nonconvex Algorithmmentioning

confidence: 99%

“…We parametrize the transport cost parameters δ τ jk and network building costs δ I jk to be the euclidean distance between each pair of locations. To ease comparison with Alder (2019), who uses a gravity model without labor mobility, we study an Armington version of our model in which each location produces its variety with fixed labor. The rest of the model is otherwise identical to the one described in section 3.…”

Section: Small Random Economiesmentioning

confidence: 99%

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Optimal Transport Networks in Spatial Equilibrium

Fajgelbaum¹,

Schaal²

2017

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We study optimal transport networks in spatial equilibrium. We develop a framework consisting of a neoclassical trade model with labor mobility in which locations are arranged on a graph. Goods must be shipped through linked locations, and transport costs depend on congestion and on the infrastructure in each link, giving rise to an optimal transport problem in general equilibrium. The optimal transport network is the solution to a social planner's problem of building infrastructure in each link. We provide conditions such that this problem is globally convex, guaranteeing its numerical tractability. We also study cases with increasing returns to transport technologies in which global convexity fails. We apply the framework to assess optimal investments and inefficiencies in observed road networks in European countries.

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Chinese Roads in India: The Effect of Transport Infrastructure on Economic Development

Cited by 67 publications

References 45 publications

Expressways, GDP, and the environment: The case of China

Expressways, GDP, and the environment: The case of China

Transport corridors and their wider economic benefits: A quantitative review of the literature

Optimal Transport Networks in Spatial Equilibrium

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