Economic Growth and Infrastructure Investments in Energy and Transportation

A Causality Interpretation of China’s Western Development Strategy

Alice Shiu, Raymond Li, Chi Keung Woo

Research output: Contribution to journalArticle

3 Citations (Scopus)
5 Downloads (Pure)

Abstract

Were the large investments in energy and transportation infrastructure effective in fostering economic growth? Or did economic growth trigger these infrastructure developments? To answer these questions, we develop a simple model of production capacity constraints and use China's Western Development Strategy (WDS) as an example to investigate how the relationships among energy investment, transportation infrastructure expansion and economic growth differ in the pre- and post-WDS periods. Our Granger causality analysis uses a panel data sample for China's 30 provinces in the Western and non-Western regions for the period of 1991-2012. We find Granger causality only in the post-WDS period from transportation infrastructure expansion to economic growth and from economic growth to energy investment. These results suggest energy and transportation capacity constraints in the post-WDS period but not the pre-WDS period. Their policy implication is that China should continue its energy and transportation infrastructure investments with improved coordination.

Original languageEnglish
Pages (from-to)211-222
Number of pages12
JournalEnergy Journal
Volume37
Issue number SI1
DOIs
Publication statusPublished - 2016
Externally publishedYes

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Economics
Wavelength dispersive spectroscopy
Energy
Development strategy
Economic growth
Western China
Infrastructure investment
Causality
Transportation infrastructure
Granger causality
China
Capacity constraints

Cite this

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abstract = "Were the large investments in energy and transportation infrastructure effective in fostering economic growth? Or did economic growth trigger these infrastructure developments? To answer these questions, we develop a simple model of production capacity constraints and use China's Western Development Strategy (WDS) as an example to investigate how the relationships among energy investment, transportation infrastructure expansion and economic growth differ in the pre- and post-WDS periods. Our Granger causality analysis uses a panel data sample for China's 30 provinces in the Western and non-Western regions for the period of 1991-2012. We find Granger causality only in the post-WDS period from transportation infrastructure expansion to economic growth and from economic growth to energy investment. These results suggest energy and transportation capacity constraints in the post-WDS period but not the pre-WDS period. Their policy implication is that China should continue its energy and transportation infrastructure investments with improved coordination.",
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Economic Growth and Infrastructure Investments in Energy and Transportation : A Causality Interpretation of China’s Western Development Strategy. / Shiu, Alice; Li, Raymond; Woo, Chi Keung.

In: Energy Journal, Vol. 37, No. SI1, 2016, p. 211-222.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Economic Growth and Infrastructure Investments in Energy and Transportation

T2 - A Causality Interpretation of China’s Western Development Strategy

AU - Shiu, Alice

AU - Li, Raymond

AU - Woo, Chi Keung

PY - 2016

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AB - Were the large investments in energy and transportation infrastructure effective in fostering economic growth? Or did economic growth trigger these infrastructure developments? To answer these questions, we develop a simple model of production capacity constraints and use China's Western Development Strategy (WDS) as an example to investigate how the relationships among energy investment, transportation infrastructure expansion and economic growth differ in the pre- and post-WDS periods. Our Granger causality analysis uses a panel data sample for China's 30 provinces in the Western and non-Western regions for the period of 1991-2012. We find Granger causality only in the post-WDS period from transportation infrastructure expansion to economic growth and from economic growth to energy investment. These results suggest energy and transportation capacity constraints in the post-WDS period but not the pre-WDS period. Their policy implication is that China should continue its energy and transportation infrastructure investments with improved coordination.

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