Working Paper: CEPR ID: DP18429
Abstract: This paper examines the impact of transportation infrastructure, designed exclusively to enhance the integration of domestic markets, on a country’s export performance. By leveraging the expansion of China’s high-speed rail (HSR) as a quasi-natural experiment, we provide robust evidence the enhanced within-sector integration that resulted from this infrastructure development significantly boosts firms’ export performance. This impact is observed through increased export sales and volume, expanded market reach, and improved product quality. Our findings are consistent with the notion that HSR connections facilitate knowledge spillovers among exporters, which aids them in overcoming information barriers and thereby improving foreign market access. Importantly, we address potential confounding factors and demonstrate that the findings remain robust when accounting for alternative channels such as supplier and customer access and labor market pooling effects. This study underscores the pivotal role of domestic transportation infrastructure in mitigating information frictions and driving a country’s international market integration.
Keywords: Agglomeration; China's High-Speed Rail; Knowledge Diffusion
JEL Codes: F14; R10; R12; O18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| expansion of China's High-Speed Rail (HSR) network (R42) | firms' export performance (L25) |
| improved geographic integration (F15) | export sales (F10) |
| improved geographic integration (F15) | export volume (F10) |
| improved geographic integration (F15) | expanded market reach (F61) |
| improved geographic integration (F15) | improved product quality (L15) |
| HSR (R50) | knowledge spillovers among exporters (F14) |
| knowledge spillovers among exporters (F14) | foreign market access (F23) |
| HSR (R50) | supplier access (L81) |
| HSR (R50) | customer access (L84) |
| HSR (R50) | labor market pooling effects (J48) |