Productivity of core infrastructure investment in China: an input–output approach

This paper examines the productivity effect of two categories of core infrastructure investment in China, by matching a panel of manufacturing firm-level production data with province-level infrastructure investment data. Cross-industry variation in infrastructure reliance using input–output table information is employed to address potential endogeneity issues. We find that firms in an industry that relies more heavily on infrastructure in production experience higher productivity growth from more infrastructure investment. On average, the annual rate of return to core infrastructure investment in China is about 23% during 1998–2007.Ministry of Education (MOE)Financial support from the MOE AcRF Tier 1 Grant M4011642 at Nanyang Technological University is gratefully acknowledged