Working Paper
103

Connective Financing: Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries

Date Published

Aug 19, 2020

Authors

Richard Bluhm, Axel Dreher, Andreas Fuchs, Bradley C. Parks, Austin M. Strange, Michael J. Tierney

Publisher

Citation

Richard Bluhm, Axel Dreher, Andreas Fuchs, Bradley Parks, Austin Strange, and Michael Tierney. 2020. Connective Financing: Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries. AidData Working Paper #103. Williamsburg, VA: AidData at William & Mary.

Note: This working paper was first published on September 11, 2018. That version is archived here: https://www.aiddata.org/publications/connective-finance-chinese-infrastructure-projects

Announcement

This paper studies the causal effect of transport infrastructure on the spatial concentration of economic activity. Leveraging a new global dataset of geo-located Chinese government-financed projects over the period from 2000 to 2014 together with measures of spatial inequality based on remotely-sensed data, we analyze the effects of transport projects on the spatial distribution of economic activity within and between regions in a large number of developing countries. We find that Chinese-financed transportation projects reduce spatial concentration within but not between regions. In line with land use theory, we document a range of results which are consistent with a relocation of activity from city centers to their immediate periphery. Transport projects decentralize activity particularly strongly in regions that are more urbanized, located closer to the coast, and less developed.

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Richard Bluhm

Richard Bluhm

Assistant Professor at the Hannover Institute of Macroeconomics at Leibniz University

Axel Dreher

Axel Dreher

Professor of Economics and Chair of International and Development Politics at Heidelberg University

Andreas Fuchs

Andreas Fuchs

Professor of Development Economics at the University of Goettingen

Bradley C. Parks

Bradley C. Parks

Executive Director

Austin Strange

Austin Strange

Assistant Professor, University of Hong Kong

Mike Tierney

Mike Tierney

Co-Director of the Global Research Institute and Hylton Professor of Government and International Relations at the College of William & Mary

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