Abstract
We evaluate how access to international transport infrastructure promotes trade and
economic development. Exploiting the gradual unfolding of transcontinental rail freight
connections between China and Europe, our empirical findings indicate increasing exports
from connected cities, with positive spillovers to other transport modes, neighboring
cities, and indicators of economic activity. Not all products and cities are equally
responsive to new rail export opportunities. We set up a multi-sector heterogeneous
firms model with a rich specification of trade costs, in which firms optimize trade costs
by choosing alternative transportation modes and routes. Leveraging a unique data
set on trade flows between Chinese cities, we calibrate our model to discuss local welfare
effects, relying on a sufficient statistic that quantifies changes in city-level trade
costs. We also highlight significant spatial distributional effects of trade infrastructure
development.
economic development. Exploiting the gradual unfolding of transcontinental rail freight
connections between China and Europe, our empirical findings indicate increasing exports
from connected cities, with positive spillovers to other transport modes, neighboring
cities, and indicators of economic activity. Not all products and cities are equally
responsive to new rail export opportunities. We set up a multi-sector heterogeneous
firms model with a rich specification of trade costs, in which firms optimize trade costs
by choosing alternative transportation modes and routes. Leveraging a unique data
set on trade flows between Chinese cities, we calibrate our model to discuss local welfare
effects, relying on a sufficient statistic that quantifies changes in city-level trade
costs. We also highlight significant spatial distributional effects of trade infrastructure
development.
Original language | English |
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Place of Publication | Maastricht |
Publisher | Maastricht University, Graduate School of Business and Economics |
Number of pages | 72 |
DOIs | |
Publication status | Published - 16 Jan 2025 |
Publication series
Series | GSBE Research Memoranda |
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Number | 001 |
ISSN | 2666-8807 |
JEL classifications
- f14 - Empirical Studies of Trade
- f15 - Economic Integration
- r11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- r41 - "Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise"
Keywords
- transport infrastructure
- trade
- regional development
- China