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Highways, Market Access, and Urban Growth in China

J G Smith building, Seminar Room C
Wednesday 10th February 2016 (16:00-17:30)
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Speaker: Vernon Henderson (LSE)


We investigate the effects of the construction of the national highway system in China on local economic outcomes. The analysis employs three main approaches. The first is based on a structural model of Ricardian trade that provides an explicit description of the general equilibrium effects of changes in the highway network. The second involves reduced form estimates of the casual effects highways, which accommodates the non-random assignment of highways across locations. The third approach is a hybrid of the first two. Technique matters. The structural model suggests that access to
domestic markets, but not to export markets, increases economic output. The reduced form estimates suggest the opposite conclusion and also point to the importance of highways in the rise of regional primate cities. These reduced form findings are consistent with export driven growth policies and central or provincial government policies favoring regional primate cities. In addition to informing policy, our results raise concerns about the use of quantitative results from Ricardian trade models in isolation for understanding how and the extent to which infrastructure drives regional growth.

Speaker biography

Vernon Henderson joined the LSE in September 2013, having previously been Eastman Professor of Political Economy at Brown University, USA. Vernon’s research focuses on urbanization in developing countries. He has on-going work in Indonesia and China, covering topics to do with urbanization but also land markets, infrastructure investment, corruption, and disaster aid delivery. He has recent work on urbanization in Sub-Saharan Africa, with a focus on migration and climate change.

His work is published in journals such as the American Economic Review, Journal of Political Economy, Review of Economic Studies, Journal of Urban Economics, Journal of Regional Science and the Rand Journal of Economics. His teaching interests include urban economics, urbanization in developing countries, and the economics of China.
Vernon is co-editor of the Journal of Urban Economics and the Handbook of Regional and Urban Economics, and serves on a number of editorial boards. He is President of the Urban Economics Association. Recent research has been funded by the World Bank, National Institute of Health and the National Science Foundation. He has provided recent policy advice to China, India, and other developing countries either directly or through the World Bank and McKinsey.

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