Dispersion of Agglomeration through High Speed Rail

TitleDispersion of Agglomeration through High Speed Rail
Publication TypeJournal Article
Year of PublicationSubmitted
AuthorsFang W, Zhao J
JournalWorking paper

Despite the eye-catching achievements of China’s high-speed rail (HSR) system in providing fast and convenient transport service, key policy inquires remain unaddressed: Will HSR bring wider economic impacts as expected? If yes, are such impacts generative or distributive, and regionally convergent or divergent? Is China’s transport infrastructure reaching saturation? Our research assesses how HSR has reshaped inter-city accessibility patterns, and how the change in accessibility influenced the productivity, scale and spatial distribution of urban economy. To capture the interaction among cities in an open economy, we expand the concept of agglomeration to include cities’ access to external resources facilitated by regional transport infrastructure, beyond their own endowment. 

The extensive HSR investment during 2001-2010 not only improved the absolute levels of intercity accessibility for all cities but also narrowed the gaps in accessibility across cities. The panel data models reveal the complexity in the relationship between accessibility and economic performance: there exist both generative components (e.g. labor productivity), and redistributive components to both convergent and divergent directions: the impact on employment is divergent (more toward large cities and particularly in private sectors), while the impact on foreign direct investment is convergent, as Central China becomes a more favorable destination. We do not observe the decreasing return of economic performance to accessibility during the study period. The top-down decision-making structure in China’s HSR system supports the exogeneity assumption of cities’ accessibility with respect to economy, which we verify using instrumental variable models.

Implications: HSR is a powerful infrastructure option to improve equality of intercity accessibility at a massive scale and significantly enhance the external agglomeration economies. For project appraisal, it is necessary to extend the standard cost benefit analysis to include the generative benefits; to evaluate the impacts on regional disparities based on distributive effects; and to avoid infrastructure overbuilding through identification of saturation.