Growth and Distributive Effects of Public Infrastructure Investments in China

37 Pages Posted: 7 Nov 2013

See all articles by Yumei Zhang

Yumei Zhang

Agricultural Information Institute of Chinese Academy of Agricultural Sciences

Xinxin Wang

Zhejiang University - College of Economics

Kevin Chen

International Food Policy Research Institute (IFPRI)

Date Written: July 2012

Abstract

Public infrastructure investments are seen as one of the key engines of economic growth in China. Yet, there is little quantitative evidence on the growth and distributive effects of public infrastructure investments (PII) in China. This paper applies a macro-micro simulation method, to assess the effects of PII on the national economy using an inter-temporal dynamic CGE model and its distributive effects on individual households using a microsimulation. The results showed that higher PII substantially raises productivity in all sectors and income in all household categories. Higher PII also helps reduce poverty and modestly improves equality. The results not only suggest that increasing PII can drive economic growth in China, but also that it is a useful strategy for the promotion of inclusive growth. In particular, China could consider investing more in rural infrastructure to reduce inequality between rural and urban households in the future.

Keywords: Public Infrastructure Investment, Inclusive Growth, Intertemporal Dynamic CGE Model, Microsimulation, China

JEL Classification: C68, H54, D30, O53

Suggested Citation

Zhang, Yumei and Wang, Xinxin and Chen, Kevin, Growth and Distributive Effects of Public Infrastructure Investments in China (July 2012). Partnership for Economic Policy Working Paper No. 2012-07, Available at SSRN: https://ssrn.com/abstract=2351148

Yumei Zhang (Contact Author)

Agricultural Information Institute of Chinese Academy of Agricultural Sciences ( email )

No 12 zhongguancun nadajie
Haidian district
Beijing, Beijing 100081
China

Xinxin Wang

Zhejiang University - College of Economics ( email )

Yuquan Campus 38 Zheda Road
Hangzhou, Zhejiang 310027
China

Kevin Chen

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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