Measuring the Impacts of Roads Infrastructure on Manufacturing Location

Abstract

Using a detailed dataset on manufacturing firms, this study analyses the link between roads infrastructure and manufacturing location in Heilongjiang province, China. The results show that the improvement in roads facilities has very limited impact on the agglomeration of economic activities in Heilongjiang province during the 2001-2013 period, but this impact has changed to be significantly positive during 2008-2013 period, which has seen greater concentration. The explanation for this finding could be that the local protectionism and failed market economy took place in Heilongjiang province more recently. We also try to differentiate this distributive effect of road infrastructures across manufacturing sectors. The empirical results show that the technology-intensive and labor-intensive firms show a greater preference for areas with better road networks, while the resource-oriented industries appear to be not attracted by better road infrastructure. Important policy implications emerge from our findings for transport planning, enabling manufacturing firms to benefit from agglomeration economies and regions to achieve sustainable economic growth.