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This paper estimates the effect of access to transportation networks on regional de- mographic and economic outcomes in China during 1986-2003. It addresses the problem of endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a large positive causal effect on per capita GDP growth rates across sectors. While we interpret this as the effect of the transportation network per se, it could also be the effect of proximity to a communication line between two big cities. These benefits appear to reflect increases in aggregate production rather than displacement of productive firms to be near transportation networks.
UC Berkeley on May 6-7, 2011 Link to Book