Transportation Infrastructure and Productivity Growth:Effects of Railway Speed-Up on Firm's TFP in China

Improvement of transportation infrastructure quality will lead to more sufficient market competition and promote the flow of resources with greater efficiency. This paper considers China’s railway speed-up in 2007 as a quasi-natural experiment on China’s transportation infrastructure quality improvement. With the initial operation of electric multiple units(EMUs) as the basis of grouping, this research examines the effect of railway speed-up on corporate total factor productivity(TFP) growth by the differencein-differences(DID) method. Overally, the results reveal positive effects both on firms’ technological change and efficiency improvement, which lead to the increase of TFP. Based on subsamples divided by different regions and types of enterprises, further analysis indicates that the productivity of exporter, non-state and coastal firms has been mostly affected by the railway speed-up. These conclusions are verified by a placebo test. Besides, firms within "one-hour economic circle" have been shown more sensitive to the effect of railway speed increase.