A Study Of The Effect Of China's Transport Network Development On Export Trade

As stated in Smith Theorem,the division of labor is limited by market scale,which means the development of transport infrastructure is expected to promote the level of division of labor.Transport infrastructure is a magnificent shock to mitigate market disintegration and has prominent influences on production and economic activities.With the development of transportation,there is more and more attention being paid to the effect of transportation-induced domestic trade cost reduction on international trade(Martincus and Blyde,2013;Liu et al.,2017).A group of scholars represented by Professor Donaldson has been laid enough attention to the evaluation of domestic transport infrastructure in a big country with scattered markets.In the past forty years,transportation in China enjoyed dramatic development and China's HSR have been a brand-new name card of China for its going-out strategy(Renmin Website,2017;A Report of The Global Survey on China's National Image during 2016-2017),which made it increasingly essential and necessary to identify and evaluate domestic transport infrastructure's economic effect.In the meantime,as discussed in many literature,China's high-flying economy is starting to lose altitude with the decrease of labor cost advantages,and it is urgent to find new guarantees to obtain sustainable growth in the new normal of the economy.Under these backgrounds,this paper tried to thoroughly study the export effect and its underlying mechanism of China's transport infrastructure network in terms of traditional road,highways and high-speed railway.Besides,we calculated enterprises' total factor productivity by using China's Industry Business performance data during 1999-2013 and adopting ACF method.The enterprises' TFP were then processed in city level,and the city's TFP and misallocation that made the study on the mechanism between export and transport tractable can be obtained.To tackle the potential endogenous problem caused by the nonrandom construction of transportation,we benchmarked Donaldson & Hornbeck(2016)who adopted an market access index to represent transport network.The calculated market access database was then be used to explore China's transport network's export effect,which can further enrich the research prespective on this field(like,the economic eveluation of transport infrastructure and determinants of export performance).The paper is consist of seven chapters.The first chapter is the introduction,which includes the purpose of this research,the research background and research status,mian idea of our research,concrete database and method being adopted to conduct our reaearch,and main marginal contrubutions(innovation points).The second chapter is a literature review,a review and analysis about China's market integration problem,transportation's influences on trade,productivity and misallocation.Also,a review on China's transport network development was made.The third chapter is a theoretical analysis on the transport network,market disintegration and export.A two countries,home country with several cities and one-part model is introduced and conducted a general equilibrium analysis,after which some implications for empirical analysis were drawn.Chapter four to chapter six were the core chapter of this paper,the main contents included: the forth chapter investigates the influence of the transport network construction on the city's export,based on urban data from 1999 to 2013 and time-variable transport network database,this chapter tried to inspect the relationship between transport network and export by difference-in-difference model's empirical analysis.The fifth chapter investigated the influence of transport network on city productivity and misallocation comprehensively and systematically.First,we calculated enterprises' productivity using China's Industry Business performance data during 1999-2013 by ACF method which estimates the value-added production function and uses the intermediates as a proxy variable to calculate enterprises' TFP.Then,enterprises' TFP was processed in city level,based on enterprises' TFP city's productivity and misallocation degree can be worked out.Lastly,analysis on transport network's effect on productivity and misallocation was conducted respectively,followed by a series of robustness checks.Chapter six further analyzed the underlying mechanism of transport network's export effect on the basis of analysis in prior two chapters,first,combined theoretical framework with and conclusions in prior literature,a theoretical concept called productivity mechanism and misallocation mechanism were being generalized and its predicted direction of effect.Then,we used a cross term model to incorporate the two potential mechanisms into analysis,also based on the panel data.Besides,robustness checks were conducted by adjusting core parameter(trade elasticity)in calculating market access.The seventh chapter summarizes the whole study,which consists of the conclusions that extracted from the results,policy implications,and moreover future research directios that may worth deeply proceeding.Through all the theoretical and empirical analysis being done aboved,the following conclusions can be obtained:(1)The market access method was used to quantify the transport network,and the benchmark regression empirical results indicate that the development of the transport network has improved cities' market access and has a significant negative effect on periphery cities.The marginal effect of railways is 5.3%,the highways' is 11.3% and high-speed railways' is 4.98%.The conclusion of basic regression past a series of robustness checks including further control fixed effect,different time periods,lagged variable,adjust parameter in calculating market access,stronger criterion of periphery city.To tackle with the potential endogenous problem caused by non-random transport plan,we adopted a PSM-DID method,and the conclusion was highly in line with the basic regression one.What's more,the heterogeneity of transport network's export effect was explored in terms of whether the city has airports,if the HSR connection made the city has direct connection and whether the city is near the core city.We found that a direct connection after being connected to HSR network positively moderately transport network's negative effect on periphery cities,while cities' airport infrastructure and city's adjacency have varied influences on different kinds of transport.(2)The development of transport network result in market access improvement which has significantly negative influence on periphery cities' productivity(quantified by TFP),and the results were further verified by robustness checks by adjusting parameter in calculating market access and using different productivity index.Taking the core cities as research object to conduct empirical analysis,and results support the prior one from basic regression.The influence of market access improvement induced by transportation development on misallocation was not significant in periphery cities' regression and significant in core cities' regression.In other words,the development of transport network decrease misallocation of core cities,which are robust in checks of adjusting parameter of market access calculation and change different misallocation index.(3)The conclusion that the development of transport network result in market access improvement was revealed,and we deduced two of potential mechanism of transport network's export effect theoretically based on prior analysis.That's,productivity mechanism and misallocation mechanism.The former one has a strengthen influence on the transport network's export effect,for periphery cities it either promotes or impedes their export,and both situations are possible.The misallocation mechanism means improve the overall matching efficiency,but for periphery cities,the improvement of factor matching efficiency means decrease of factors,which consequently will lead to a negative effect on their export,in other word strength transport network's negative effect on periphery cities export.As shown in empirical analysis,city's productivity positively moderate transport network's export effect on periphery city,which means strengthening transport network's negative export effect in periphery cities.The empirical results revealed that the two mechanisms,productivity mechanism and misallocation mechanism exist simultaneously but the prior one is much more significant than the former one.(4)From the perspective of spatial,the export effect of China's transport network presents significant siphonic effect.As revealed by the empirical regression,the export effect of China's transport network is a kind of spatial selection effect that put forward by Baldwin and Okubo(2006),say when centripetal forces are greater than the centrifugal forces more efficient enterprises will concentrate forward core cities.With the development of transport network,more productive factors allocate to comparatively efficient core cities and strengthen the concentration of economic activities.The overall production efficiency is being improved at the cost of bringing negative effect on periphery cities' export and even raising the economic gap between cities and regions,which are undesirable for policy makers.This paper provides a comprehensive description on the transport network's export effect of China and its underlying mechanism from the perspective of market access,and the analytical framework is also applicable for countries like China,which not only points out the mechanism on theoretical level,but also finds out empirical evidence from objective data.To some extent,the study enriched practical analysis of heterogenous productivity firm trade theory by big countries' experience and further complement the economic evaluation of transport network,which can provide important deveopmental policy implications for China's transport further construction and export development.