WHO IS HURT BY HIGH COSTS OF LOGISTICS? EVIDENCE FROM CHINESE PROVINCIAL PANEL DATA

This paper empirically examines the influence of logistics costs to economy, foreign trade and FDI with a new method of panel data vector autoregression based on provincial panel data in China from 1999 to 2010. The research discovers that the variation of logistics cost gives less adverse impact to economy than to foreign trade and FDI; high logistics cost has a negative effect on foreign trade and FDI. Furthermore, high logistics cost only can sustain regional income of middle and western region in a short time, but it is really a burden to the rich east. To improve the robustness of the conclusion, this paper also uses several other proxy variables of logistics cost, and divides the data into three parts respectively in East, Middle and West regions.