The Effect Of Highway Construction On Enterprises’ TFP

Transportation infrastructure is regarded as a powerful booster of local economy, it can improve local economy through decreasing transportation cost and other ways. Thus, the study on how transportation infrastructure works and the effect size of transportation infrastructure is the hot point of economic research all the time. Because of data availability and other reasons, researcher mainly focused on macroscopic aspect, empirically study the effect of transportation infrastructure on local economy. Most research found that good transportation infrastructure could improve region’s GDP and region’s TFP.My research proceeds from microscopic aspect, in order to study how transportation infrastructure affects local enterprises’ TFP. Because the amount of highway of Zhejiang province increased rapidly on 21st, and the number of Zhejiang industrial enterprises is large and the data is easily accessible, my research mainly studies the effect of highway on local enterprises’ TFP in Zhejiang province.The mechanism of how highway affects enterprises includes four aspects:1. Improve enterprise transportation condition, decrease transportation cost, and extend lifespan of some assets in enterprises.2. Shorten the lead time of enterprise purchase, decrease minimum safe inventory level, thus decrease enterprise’s inventory cost.3. Extend the sales area of product.4. The improvement of transportation infrastructure benefits to increase the return of capital, then attracts more foreign capital establish enterprises in this area. The first two points can increase enterprises’ benefit by decreasing cost, thus enterprises could invest more capital to innovate and research. The last two points will decrease enterprises’ benefit by aggravating the competition between enterprises, so enterprises have to intensify their innovation for getting rid of homogeneous malignant price competition. The all points can force enterprises to improve their innovation level, and finally improve enterprises’ TFP.After controlling relative variables and time and industry factors, empirical results show that the TFP of enterprises which locate in the area existing highway will increase 9.42%(fixed effect).The empirical study on mechanism show that highway could attract more foreign capital and enterprises, increase industrial sales by 4.18%, decrease operating expense by 2.64%, and increase total profit by 4.09%.This paper confirms that highway has significantly positive impact on long-term economic growth and the investment of transportation infrastructure has positive significance. And this paper offers well theoretical support and advice on transportation infrastructure construction. At the same time, it enriches the empirical study on transportation infrastructure.