Infrastructure development and economic growth in China

China is the fastest growing country in the world for last few decades and one of the defining features of China's growth has been investment-led growth. China's sustained high economic growth and increased competitiveness in manufacturing has been underpinned by a massive development of physical infrastructure. In this context, we investigate the role of infrastructure in promoting economic growth in China for the period 1975 to 2007. Overall, the results reveal that infrastructure stock, labour force, public and private investments have played an important role in economic growth in China. More importantly, we find that Infrastructure development in China has significant positive contribution to growth than both private and public investment. Further, there is unidirectional causality from infrastructure development to output growth justifying China's high spending on infrastructure development since the early nineties. The experience from China suggests that it is necessary to design an economic policy that improves the physical infrastructure as well as human capital formation for sustainable economic growth in developing countries.

Prioritization of Policies: A Prototype Model of a Flowchart Method

This paper builds a prototype model of how to prioritize policies by using a flowchart. We presented the following six steps to decide priorities of policies: Step 1 is to attain the social subsistence level (primary education, health care, and food sufficiency); Step 2 is to attain macroeconomic stability; Step 3 is to liberalize the economy by structural adjustment programs; Step 4 is capacity building specific to a growth strategy by facilitating sufficient infrastructure (physical infrastructure and institutions); Step 5 is to initiate a growth strategy; and Step 6 is to narrow income inequalities. We illustrated the effectiveness of our "flowchart method" in case studies of Morocco, Laos, Vietnam, and China. The first priority of reforms in Morocco was given to social sectors of primary education and health care, particularly in the rural areas at Step 1. Laos should not put much emphasis on growth strategy before educational reform, attainment of macroeconomic stability, and institutional capacity building at Steps 1, 2, and 3. Vietnam can focus on reforming the state-run enterprises and developing the stock markets at Step 5 of growth strategies. We found that we should apply our flowchart method to China not nation-wide but province-wide.

Geographical simulation analysis for logistics enhancement in Asia

This paper presents a simulation of the reduction of several components in trade cost for Asia and examines its impact on the economy. Our simulation model based on the new economic geography embraces seven sectors, including manufacturing and non-manufacturing sectors, and 1,715 regions in 18 countries/economies in Asia, in addition to the two economies of the US and the European Union. The geographical course of transactions among regions is modeled as determined based on firms’ modal choice. The model also includes estimates of some border cost measures such as tariff rates, non-tariff barriers, other border clearance costs, transshipment costs and so on. Our simulation analysis for Asia includes several scenarios involving the improvement/development of routes and the reduction of the above-mentioned border cost. We have shown that the contribution of physical and non-physical infrastructure improvements conducted together is larger than the sum of the contribution by each when conducted independently.

The IDE geographical simulation model : predicting long-term effects of infrastructure development projects

It is important to be able to predict changes in the location of populations and industries in regions that are in the process of economic integration. The IDE Geographical Simulation Model (IDE-GSM) has been developed with two major objectives: (1) to determine the dynamics of locations of populations and industries in East Asia in the long-term, and (2) to analyze the impact of specific infrastructure projects on the regional economy at sub-national levels. The basic structure of the IDE-GSM is introduced in this article and accompanied with results of test analyses on the effects of the East West Economic Corridor on regions in Continental South East Asia. Results indicate that border costs appear to play a big role in the location choice of populations and industries, often a more important role than physical infrastructures themselves.