Road investment and inventory reduction: Firm level evidence from China∗
نویسندگان
چکیده
This paper empirically identifies a channel through which transport infrastructure improves the efficiency of an economy: reducing inventory stock. To deal with potential endogeneity, we introduce two identification tests. Applying them to a large panel data set on Chinese manufacturers from 1998 to 2007, we find that the dramatic improvement in China’s road transportation network has significantly lowered firms’ raw materials inventory level. One dollar of road spending saved around two cents of inventory, implying a return comparable to that for the US in the 1980s. Moreover, evidence suggests strong spillover effect of road investments on firms in neighboring provinces. JEL classifications: H54, R3, R4
منابع مشابه
Road investment and inventory reduction: Evidence from a large developing economy∗
Using information on firms’ inventory, we introduce a novel approach to estimate the causal effect of transport infrastructure on the economy. We apply this approach to China, where the length of road has tripled and the inventory-sales ratio has declined by three quarters since 1978. Our identification tests suggest that these two phenomena are causally linked (with data covering medium and la...
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