Exploring the Impact of Transportation Infrastructure on Regional Economy in China based on GMM and Threshold Effects

Abstract

Abstract With the continuous implementation of transportation strategies, the relationship between transportation infrastructure and the regional economy has been receiving extensive attention. However, in the face of the economic downturn, whether the investment in transportation infrastructure can obtain the expected return is worthy of further discussion. Firstly, this study uses random forests to downscale the provincial transportation indicators and constructs a comprehensive indicator reflecting the transportation infrastructure. Secondly, to control the influence of lagged economy, this research uses multiple linear regression model to determine the number of lagged periods of the economy. Subsequently, system Generalized Method of Moments (GMM) and difference GMM estimation are used to explore the relationship between transportation infrastructure and regional economy. Finally, this study explores the nonlinear relationship between the two through the threshold effect. The results show that in the context of economic downturn, transportation infrastructure is still positively correlated with the economy in general. In addition, the employment rate, population, fixed asset investment all have a driving effect on the economy. Industrial structure, on the other hand, currently harms the economy. Further, from a non-linear perspective, transportation infrastructure has an inverted U-shaped effect on the economy. Below the first threshold, transportation infrastructure is negatively correlated with the regional economy; when it lies between the first and second thresholds, the construction of transportation infrastructure has a high driving effect on the regional economy; when it is higher than the third threshold, this driving effect will be weakened.