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    Infrastructure and Urbanization in the People’s Republic of China

    Li, Zhigang | January 2017
    Abstract
    The recent experience of infrastructure investment in the People’s Republic of China (PRC) suggests an intertwined relationship between investment, urbanization, and economic growth. In one mechanism, urbanization generates demand for infrastructure investment, which then drives economic growth via various channels including reducing transaction costs and raising productivity. Another mechanism emphasized in this paper is that infrastructure investment can promote urbanization through facilitating economic agglomeration toward hub cities. This agglomeration process also raises productivity in the economy. The lessons from the PRC have implications for infrastructure financing. On the one hand, recent reforms have allowed the market to play an increasingly important role in funding infrastructure investment, helping improve the efficiency of infrastructure investment and the productivity of the economy. On the other hand, evidence in the PRC suggests a cross-province spillover effect of road infrastructure, supporting the central government’s role in infrastructure financing. Although the current infrastructure investment system is still distorted by local governments’ incentives and decisions, there is no evidence of over-investment in infrastructure at the aggregate level. Nevertheless, there is strong evidence that the marginal return to infrastructure investment in the PRC has been rapidly declining. Hence, it is urgent for policy makers to reform the existing system to base their investment decisions on the economic returns to infrastructure. The interregional flow of goods and production factors (labor and capital) is a fundamental force that drives urbanization, but the market may not be efficient in financing and infrastructure construction. This paper analyzes infrastructure-related institutions and the interrelation between infrastructure and urbanization. It addresses the following issues: What is the relationship between infrastructure, growth, and urbanization? How efficient have investment and financing been for infrastructure construction? How can we evaluate the performance of infrastructure development? How and to what extent should the government be involved in infrastructure construction?
    Citation
    Li, Zhigang. 2017. Infrastructure and Urbanization in the People’s Republic of China. © Asian Development Bank Institute. http://hdl.handle.net/11540/6791.
    Keywords
    Urban Plans
    Urbanism
    Urban agriculture
    Economic Development
    Rural Urban Migration
    Cities
    Development projects
    Physical infrastructure
    Soft infrastructure
    Infrastructure finance
    Infrastructure bonds
    Transport infrastructure
    Roads
    Highways
    Railways
    Ports
    Airports
    Pipelines
    Water supply
    Power production
    Power transmission
    Power distribution
    Telecommunications
    Infrastructure connectivity
    Cross border connectivity
    Urbanization
    Urban Services
    Urban Projects
    Urban Problems
    Urban Poverty
    Urban Policy
    Urban Planning
    Urban Infrastructure
    Urban Health
    Urban Government
    Urban Economic Development
    Urban Development Finance
    Urban Development
    Urban Conditions
    Urban Communities
    Urban Population
    Local government
    Urban renewal
    Urban housing
    Urban sociology
    Transit systems
    Rapid transit
    Public transit
    Mass transit
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/6791
    Metadata
    Show full item record
    Thumbnail
    adbi-wp632.pdf (1.847Mb)
    Author
    Li, Zhigang
    Theme
    Infrastructure
    Urban
    Labor Migration

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    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise