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The Economist:
Bridges to somewhere

19 July 2014

An assumption underpinning China's investment policy is that connecting the hinterland to transport should support its development. But the construction of an early phase of China's national trunk highway system - 35,000km of highways, built from 1992 to 2007 at a cost of $120 billion - suggests that is not always the case. In a new article, Benjamin Faber of the University of California, Berkeley, finds that GDP growth was reduced by about 18 percent over time in smaller counties that were connected to the highway system relative to ones that were not. Industrial output shrank when goods streamed in from more advanced areas, displacing local products. In other words, better infrastructure sometimes saps, rather than invigorates, poorer regions.

This article was published by The Economist - Free Exchange on July 19, 2014
Link to article here

Related publications
'Trade Integration, Market Size and Industrialization: Evidence from China's National Trunk Highway System', Benjamin Faber, Centre for Economic Performance Discussion Paper No.1244, October 2013

Related links
Benjamin Faber webpage
Globalisation Programme webpage

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