Transport infrastructure, urban growth, and market access in China

In 2007, about 20% of World Bank lending was for transport infrastructure investments, more than its lending for social programs. In the same year, China invested about $200 billion in transport infrastructure. Understanding the impact of transportation infrastructure on the growth and spatial organization of cities is crucial if policymakers are to make wise infrastructure investments.

Many developing countries face the challenge of accommodating large migration flows from rural to urban areas. Indeed, by 2020 over half of the population of developing countries will live in urban areas, many in urban slums, and this fraction is only expected to increase going forward. However, little is known about the extent to which existing urban infrastructure, including transportation networks, can accommodate such population pressures and facilitate improvements in their productive capacities.

Better understanding the mechanisms through which various elements of the transportation network foster urban growth is important for shaping decisions about which types of urban and inter-urban transportation networks have the highest returns. The Chinese experience is useful for research purposes because its relatively high quality data, and context of vast recent transport infrastructure expansions serving many cities facilitates recovery of credible causal effects. However, the results will apply broadly to other developing economies that are experiencing rapid urbanization, as China has since 1990.

• This study intends to quantify causal effects of investments in various elements of road and railroad networks on economic growth in Chinese cities since 1990.
• Researchers will separately estimate the impacts on urban growth of transport links to nearby markets through market potential from the more direct effects of transport infrastructure on city level productivity. Direct effects may operate through various mechanisms including labour and capital flows, industrial specialization and more efficient urban form.
• Critical to this evaluation is the use of pseudo-random variation in the allocation of transport networks to cities and their surrounding regions. This heterogeneity in treatment intensity is recovered using variation in historical transport networks serving cities and surrounding regions.