The effect of transportation infrastructure development on firms’ performance: evidence from China

China's remarkable economic growth during the last four decades was accompanied with rapid infrastructure expansion. Its total length of high-class highways increased from 997,500 to 2,535,400 km from 1997 to 2007, but the following firm-level impacts are still unclear. This dissertation focuses on the impacts of rapid highway expansion on firm performance, composed of three topics. The first topic investigates the impacts of highway construction on firms' productivity, while the second topic focuses on the impacts of highway construction on firm size and size dispersion because the first topic reveals that productivity is strongly related to firms' scales. The baseline empirical studies of these two topics are based on a new constructed geographical highway dataset and the Annual Survey of Chinese Industrial Firms dataset, which enable us to estimate firm-level traffic accessibility. In order to address endogeneity issues, we construct IVs based on historical and counter-factual roads. The results of these two topics confirm that highway construction can promote the increase of productivity, size dispersion, and market concentration; this process is mainly motivated by the scale economies of larger firms, entry and relocation of new and small firms. The third topic focuses on the impacts of highway construction on export activities. It combines Chinese transaction-level customs dataset with the two datasets applied in the previous two topics, which enable us to estimate firms' export transportation costs to the nearest trade posts. In order to address endogeneity issues, new IVs are also constructed according to historical and counter-factual roads in this topic. The results show that highway construction can increase firm-level export value and scope, encourage incumbent or new entry firms to produce more differentiated goods. These impacts are more beneficial for inland regions and motivate Chinese export basket to evolve toward a more diversified structure and increase Chinese overall economic complexity