Connective financing: Chinese infrastructure projects and the diffusion of economic activity in developing countries

• DOI: 10.1016/j.jue.2024.103730
• Publication Date: 2024-12-09T20:31:34Z
• Authors: Richard Bluhm; Axel Dreher; Andreas Fuchs; Bradley C. Parks; Austin M. Strange; Michael J. Tierney
• Keywords: China; foreign aid; infrastructure; Foreign aid; Transport costs; 0502 economics and business; 11. Sustainability; development finance; transport costs; F35; Development finance; Transport costs; Infrastructure; Foreign aid; Spatial concentration; China; Infrastructure; P33; Development finance; ddc:330; F15; 05 social sciences; 1. No poverty; spatial concentration China; O18; O19; R11; R12; 8. Economic growth; spatial concentration; Spatial concentration

Journal of Urban Economics, 145<br/>This paper studies the causal effect of transport infrastructure on the spatial distribution of economic activity within subnational regions across a large number of developing countries. To do so, we introduce a new global dataset of geolocated Chinese grant- and loan-financed development projects from 2000 to 2014 and combine it with measures of spatial concentration based on remotely sensed data. We find that Chinese-financed transportation projects decentralize economic activity within regions, as measured by a spatial Gini coefficient, by 2.2 percentage points. The treatment effects are particularly strong in regions that are less developed, more urbanized, and located closer to cities.<br/>ISSN:0094-1190<br/>