1. Introduction
The Silk Road has provided important contributions to the global economic and cultural exchanges with far-reaching historical significance. However, this once-prosperous economic corridor has been overtaken and left behind by other regions. As strategies for China’s economic development become more regionalized, plans to revitalize the economy of the Silk Road have been proposed. In 2013, China’s President Xi Jinping put forward the concept of the “New Silk Road Economic Belt”. In 2015, the National Development and Reform Commission, the Ministry of Foreign Affairs, and the Ministry of Commerce in China jointly issued the “Visions and Actions for Promoting the Joint Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road” (hereinafter referred to as the “Belt and Road Initiative”), which aims to develop the Silk Road as a powerful venue to promote economic development along its route and create a “community of common destiny” with shared political trust, economic integration, and cultural tolerance.
In order to support the progress of the "New Silk Road Economic Belt", an interconnected transportation network has to be developed. In recent years, the construction of transportation infrastructure has been in full swing in various regions of China, which has entered the high-speed rail era. According to statistics, China’s high-speed rail has had an operating mileage of over 35,000 kilometers by the end of 2019, ranking steadily at No.1 (CCTV, 30 December 2019).
Realizing the “Eight Vertical and Eight Horizontal” blueprint in high-speed rail construction would further expand the range of the current high-speed rail network, which will bring the rapid flow of talents, capital, technology, information, and other elements, and becomes the "fast way" to promote the development of the local economy. This is critical in order to maintain stable growth of regional economies while achieving high-quality economic development. Under this backdrop, we examine the impact of high-speed rail system on the economic growth of cities, focusing on the New Silk Road Economic Belt as the study site. Overall, the high-speed rail network is more extensive in eastern China, while the Silk Road Economic Belt is located in the west. This leads to a number of important questions that need to be examined: Does the high speed-rail network have a promotional effect on regional economic development? What is the impact mechanism of the various factors? Does any promotional effect demonstrate heterogeneity under different urban scales, marketization levels, and government efficiency? In order to answer these questions, a DID differential analysis was conducted on regions with and without high-speed rail. We also explore the heterogeneity of the high-speed rail effect and characterize some of its underlying aspects. The results of this study provide a basis for each region to further expand regional development space, promote regional economic growth and formulate relevant policies according to local conditions with the help of high-speed rail construction
2. Literature Review
Transportation infrastructure is essential for driving regional economic growth [
1,
2]. As early as the 20th century, many foreign economists have proposed theories explaining the relationship between transportation infrastructure construction and economic development. For example, Rodan’s (1943) “big push” theory suggests that the development of infrastructure such as transportation is a crucial prerequisite for economic take-off [
3]. Nurkse (1966, Editor Zhai J) argues that the government should take the primary responsibility in infrastructure investment to promote economic growth [
4]. Rostow (1960s) “stage of economic growth” theory suggests that developing countries should give priority to the development of transportation infrastructure [
5]. In the late 20th century, as an important technological innovation, the emergence of high-speed rail has considerably reduced the commuting time between regions, indicating significant improvements in the level of transportation infrastructure. The rapid development of high-speed rail has also stimulated research interests among local and international scholars regarding the relationship between high-speed rail and economic growth.
Research on the economic effects of high-speed rails is mainly implemented at the macro-level or at the micro-level. Previous studies at the macro-level analysis have mainly focused on the impact of high-speed rail opening on economic growth, economic agglomeration, and economic gaps. Two contrasting views have been proposed, with one suggesting that high-speed rail can drive regional economic growth. Kim (2000) studied the development of high-speed rail in Japan and Europe and found high-speed rail enhance interregional accessibility and promote regional economic growth by influencing the location and career choices of residents [
6]. Albalate (2016) concluded that high-speed rail save on costs, promote employment, and subsequently stimulate regional economic growth [
7]. Wang and Li (2014) studied the economic development of cities along the Shanghai-Hangzhou high-speed rail line and found that the inauguration of high-speed rail has a significant role in promoting the economic growth of cities along the line [
8]. Another view states that this driving effect is ambiguous, which can promote economic aggregate significantly in the short term but has less effect on economic growth [
9]. This is mainly due to the fact that the impact of high-speed rail on regional economic growth hinges on factors such as network layout, construction cost, and environmental cost [
10,
11,
12,
13].
On the subject of economic agglomeration, the impact of high-speed rail on cities along the railway is indefinite. Some scholars believe that the economic agglomeration levels of cities along the line have shown significant improvements with high-speed rail, promoting the economic agglomeration level of the regional economy [
14,
15,
16,
17]. However, the imbalance embedded in the high-speed rail network construction has a different impact on cities with heterogeneous geographical location and economic development level. In essence, the status of central cities could be enhanced, while peripheral cities might run the risk of being marginalized. Thus, the economic impact of high-speed rail on cities along the route can be either an agglomeration effect or a diffusion effect, which can be revealed by analyzing the impact mechanism of high-speed rail on urban agglomeration.
With respect to economic gaps, most studies have shown that high-speed rail has improved the accessibility of cities, making the production factor resources of the surrounding regions congregate around node cities. As well, while the introduction and expansion of high-speed rail encourage economic growth, cities not covered by the system may be adversely affected [
10,
18,
19,
20] However, some scholars disagree with this view. For example, Li et al. (2016) suggest that at the national level, high-speed rail promotes economic agglomeration in China’s western region and is conducive to equalizing economic disparities [
21]. Similarly, while studying China’s Fujian Province, Li and Huang (2018) found that the spillover effect of county-level economic growth decreases after opening the high-speed rail, which supports a more balanced development of the regional economy [
22].
Some studies suggest that the opening of the high-speed rail provides big cities with better “relative accessibility”, while small and medium-sized cities also get “absolute accessibility” improvement [
23]. It has been suggested that high-speed rail has led to the spatial polarization development of the tertiary industry in large cities and that it has stimulated the division of work and cooperation between large cities and small and medium-sized cities and the balanced development of the secondary industry. High-speed rail has promoted the "urbanization effect" between adjacent large cities, but it is still considered to be at the initial stage of urbanization. High-speed rail also enables small and medium-sized cities around megacities to gain the beneficial effect of the diffusion ring [
24,
25]. Therefore, the impact of high-speed rail on the economic development of different scale cities has not been consistent.
Aside from analyzing at the macro-level, studies regarding high-speed rail have been implemented at the micro-level. Micro-level analysis mainly focuses on the impact of the high-speed rail system on corporate innovation, investment, and productivity. By shortening business travel time, high-speed rail facilitates communication and cooperation among enterprises, accelerates the flow of factors such as capital and technology, and reduces information asymmetry [
26], all of which are conducive to improving the competitiveness of enterprises. Du and Peng (2017) found that the opening of high-speed rail enhances city attractiveness, attracts more highly educated talents, promotes interregional flow of innovation elements including technology and knowledge, and increases innovation investment of enterprises [
27]. Similarly, Tan et al. (2019) analyzed the relationship between high-speed rail and corporate innovation. They found that compared to cities without high-speed rail, the number of patent applications is significantly higher for listed companies in cities with high-speed rail [
28]. Long et al. (2017) studied the impact of high-speed rail on regional investment in terms of venture capital. They found that high-speed rail facilitates face-to-face communication between investors and companies, which can help reduce information asymmetry and attract more venture capital [
29]. Wen et al. (2019) also found that the opening of high-speed rail increases investment efficiency and subsequently improves industrial performance [
30]. Huang and Sun (2019) found that high-speed rail improves total factor productivity and affects non-state-owned businesses more distinctly than state-owned enterprises [
31].
Research in the field of high-speed rail and economic growth has been growing, yielding important results. However, there are varying opinions regarding the relationship between high-speed rail and the national economy, and a convincing theoretical explanation is missing dissecting the internal mechanism of that relationship. The “Belt and Road Initiative” is an important national strategy for China in the context of its opening-up and expansion to the outside world. The economies on the New Silk Road Economic Belt is relatively backward, which makes improving the transportation infrastructure and the inter-regional interconnection particularly crucial for these regions’ future development.
4. Model and Data
4.1. Model Setting
In China, high-speed rail construction is within the purview of the national-level strategic plan. Local governments often do not know of the plans regarding the construction of high-speed rail before the formal announcement by the central government [
41]. In addition, building a high-speed rail station is not determined by a city’s economic scale, but whether it is geographically connected to the central city. In general, high-speed rail construction can be characterized as having a certain degree of randomness, which can be represented by a quasi-natural experiment. Based on the recommendations from previous research, in this study, we set cities with high-speed rail as the treatment group and those without high-speed rail as the control group. We introduced a dummy variable, hsr, which was set to zero for the control group. For the treatment group, the value was set to zero before the opening of the high-speed rail and set to one after the opening. A difference-in-differences (DID) technique was then used to estimate the net effect of high-speed rail opening on urban economic growth. The benchmark model is set as follows:
where the subscripts
i and
t indicate the city and year, respectively;
Y is the explained variable;
X is a set of control variables used to control the economic characteristics of each city;
hsr is the high-speed rail opening variable;
α is the constant term;
λ is the urban fixed effect;
τ is the year fixed effect; and,
ε is the random error term. The parameter
β is the primary focus of this study. If
β > 0, the opening of high-speed rail is conducive to urban economic growth; if
β < 0, the opposite is true; and if
β = 0, the high-speed rail opening makes no significant contribution to urban economic growth.
4.2. Sample and Data Selection
As stated in the “Belt and Road Initiative”, the New Silk Road Economic Belt comprises six northwestern provinces (Xinjiang, Shanxi, Gansu, Ningxia, Qinghai, and Inner Mongolia), three northeastern provinces (Heilongjiang, Jilin, and Liaoning), and three southwestern provinces (Guangxi, Yunnan, and Tibet). In this study, 89 cities from these 12 provinces were considered as part of the sample population, wherein 43 cities formed the treatment group (with high-speed rail), and the remaining 46 cities formed the control group.
Explained variable (Y). Generally, urban economic growth is measured through the GDP. However, for this study, given pronounced scale differences existing among cities, we modified the index to per capita GDP.
High-speed rail opening variable (hsr). The values were set as follows: when city i opened high-speed rail in year t, the value of t (and later years) is set to 1, while the value of year before t is 0. Thus, the hsr variable of the control group is always 0; while. the hsr variable of the treatment group is 0 before the opening of the high-speed rail, and 1 afterward.
Control variable (X). Aside from the opening of high-speed rail, other factors have significant impact on urban economic growth. In order to exclude the influence of other factors, we added several control variables to the benchmark model. In the classical Cobb-Douglas function, labor and capital input are used to model economic growth. For this study, these two variables were added as control variables. Labor input was denoted by population density (ln
pop) and was measured by population per square kilometer. The higher the population density, the higher the labor input. Capital input was expressed by capital stock (ln
k), estimated using the perpetual inventory method. The annual physical capital stock was calculated according to the constant price index in 2004, and the depreciation rate was set to 9.6%. For more details on the calculation methods, see Zhang et al [
42]. Additional factors that were used as control variables in this study include the following: the level of innovation (
inno), measured by the Urban Innovation Index in China Urban and Industrial Innovation Report 2017; foreign investment (ln
fdi), measured by the amount of direct foreign investment per capita; financial development level (ln
fina), measured by the proportion of loan balance of financial institutions in urban GDP; industrial structure (ln
s), measured by the proportion of the secondary industry; and wage level (ln
wage), measured by the average wage of employed workers (see
Table 1).
In total, we collected the panel data of 89 cities on the New Silk Road Economic Belt from 2004 to 2016. Economic data were obtained from the
China City Statistical Yearbook, the
China Statistical Yearbook, and the
China Urban and Industry Innovation Report 2017. All economic data were calculated as actual indicators based on the price index for 2004. The situation of high-speed rail opening in each city was determined using information from China’s high-speed rail website (
www.gaotie.cn). Descriptive statistics for each variable are shown in
Table 2.
7. Conclusions and Policy Implications
The priority task in promoting the development of trades along the “Belt and Road” is to establish a smooth regional transportation network. In his study, we used a quasi-natural experiment to study the impact of high-speed rail opening on the economic growth of cities along the New Silk Road Economic Belt. Our results show that following the opening of high-speed rail, significant increases in economic growth were observed both in terms of total GDP and per capita GDP. Furthermore, the impact of high-speed rail opening on economic growth showed distinct heterogeneity. Large cities, having stronger siphoning effect, exhibited stronger economic growth as a result of high-speed rail opening. Also, cities with higher marketization levels and higher government efficiency were shown to have stronger economic growth effect, resulting from higher efficiency in resource allocation.
The conclusions of this research lead to a number of important policy implications and recommendations. First, in order to accelerate the process of regional integration, greater investments have to be made with regard to the construction and improvement of the transportation infrastructure along the “Belt” region. The results from this study show that high-speed rail can significantly affect city and regional economies and highlight the crucial role of transportation infrastructure in promoting economic growth.
Second, large-scale urban centers can be used to more effectively attract essential resources and magnify the effect of high-speed rail in promoting economic growth. The heterogeneity analyses show that the economic effect of high-speed rail in big cities is higher, highlighting their stronger ability for economic agglomeration and growth potential. At the same time, decision-makers have to be cautious not to overlook other areas for growth. Excessive expansion may develop into resource mismatch, which would result in large scale urban areas with no agglomeration capacity.
Third, policymakers should be more cognizant of the roles and the relationship between the government and the market. The heterogeneity analyses show that the positive impact of high-speed rail is more robust in cities with higher degrees of marketization and higher government efficiency. This suggests that while construction of transportation infrastructure can provide some agglomeration advantage, effective market mechanisms and sufficient government support have to be in place to achieve efficient allocation of factor resources and guide the development of industries. In areas where market mechanisms do work, the government should actively promote marketization and support the market to achieve its potential in resource allocation. In areas where market mechanisms fail, the government should proactively improve administrative efficiency and use its “visible hands” to make up for market failures.
Our study does have some limitations, most of which hinge on the research level. We mainly examined the impact of high-speed rail on the economic growth of cities along the Silk Road Economic Belt from a relatively macro level, while the internal channel or the micro basis of these effects have not been covered. For example, whether the opening of high-speed rail has changed the production activities of enterprises in cities along the route and the pattern of population flow in these cities are research topics for further exploration. With the enrichment of micro-level data and the expansion of sample size, these could be considered as directions for future research of this paper.