The power of infrastructure and market institutions in economic development and growth convergence: Evidence from Chinese provinces

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 07 March 2023


Zoom and Lennox room level 1 Crawford School


Ligang Song, Australian National University

This paper studies how infrastructure contributes to long-run economic growth and transitional convergence with institutions as a mediating factor in China. Using a panel dataset of 30 Chinese provinces from 1998 to 2018 and a variety of estimators, the paper finds overwhelming support to the positive effect of infrastructure on growth and highlights regional heterogeneity in the importance of institutions. The results show institutions play a determining role in infrastructure’s productivity for less developed economies. The results also disentangle infrastructure’s effects in the long-run (0.33) and short-run (-0.04-0.16), adding insights to its dynamic path and illuminate its significance as a condition for regional growth convergence – Chinese provinces catch up in about 20 years controlling for infrastructure and institutions. The joint effects of the infrastructure-institution interaction also generate development and policy implications that would be applicable for developing and transitioning economies alike.

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