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The Direct and Indirect Effects of Infrastructure on Firm Productivity: Evidence from Manufacturing in the People's Republic of China

Author
Wan, Guanghua; Zhang, Yan
Abstract
This paper attempts to distinguish and estimate the direct and indirect effects of infrastructure on firm productivity. The latter arises from the infrastructure–agglomeration link and has been largely overlooked in the literature on infrastructure. An analytical framework is then developed to estimate both effects. Finally, empirical results are obtained using large-scale firm-level survey data from the People’s Republic of China (PRC). Major findings include: (1) all the three kinds of infrastructure—road, telecommunication servers, and cable—are found to directly promote firm productivity; (2) they also exert a positive indirect effect on firm productivity through the agglomeration channel; and (3) the empirical results are robust to different agglomeration indicators and different subsamples.
Date Issued
2017-04-01Subject
infrastructure; indirect effect; productivity; agglomeration; PRC
Rights
Required Publisher Statement: © Asian Development Back. Available at ADB’s Open Access Repository under a Creative Commons Attribution license (CC BY 3.0 IGO).
Type
article
Except where otherwise noted, this item's license is described as Required Publisher Statement: © Asian Development Back. Available at ADB’s Open Access Repository under a Creative Commons Attribution license (CC BY 3.0 IGO).