Connective financing: Chinese infrastructure projects and the diffusion of economic activity in developing countries
Date Published
Dec 9, 2024
Authors
Richard Bluhm, Axel Dreher, Andreas Fuchs, Bradley C. Parks, Austin M. Strange, Michael J. Tierney
Publisher
Journal of Urban Economics
Citation
Bluhm, R., Dreher, A., Fuchs, A., Parks, B. C., Strange, A. M., & Tierney, M. J. (2025). Connective financing: Chinese infrastructure projects and the diffusion of economic activity in developing countries. Journal of Urban Economics, 145, 103730. https://doi.org/10.1016/j.jue.2024.103730
Note: A version of this article was previously published as an AidData Working Paper.
Abstract
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.
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Featured Authors
Axel Dreher
Professor of Economics and Chair of International and Development Politics at Heidelberg University
Andreas Fuchs
Professor of Development Economics at the University of Goettingen
Bradley C. Parks
Executive Director
Austin Strange
Assistant Professor, University of Hong Kong
Mike Tierney
Co-Director of the Global Research Institute and Hylton Professor of Government and International Relations at the College of William & Mary
