Transport Development, Regional Concentration and Economic Growth

Abstract

‘New Geographical Economy’ suggests an inverted-U-shaped relationship between transport costs and regional economic concentration. By using data on Chinese prefectures, this paper examines the relationship between transport development and economic concentration, to investigate the ‘point effect’ and ‘network effect’ of transport stocks and to gauge their relative magnitudes. The paper concludes the following: the development of urban roads leads to rising GDP shares in the city-proper for both manufacturing and service industries; major regional roads have the same effect. A ‘point effect’ is found for both urban roads and major regional roads in GDPs. There are spillover effects for both urban roads and major regional roads. Finally, different types of transport infrastructure have different economic impacts. The policy implication is that the urban–rural economic growth gap is likely to continue to increase with urban and regional transport development during the rapid urbanisation concurrently undertaken.