Dynamic causal linkage between road infrastructure and manufacturing agglomeration in Northeast China

Effective transport infrastructure planning requires ample knowledge of the impacts of road infrastructure provision on manufacturing locations. This study seeks to disentangle the dynamic causal relationship between road infrastructure and manufacturing agglomeration in Northeast China from 2000 to 2010 under the framework of a panel data vector auto-regression (PVAR) model. The results indicate that lane-mile additions of intra-provincial road infrastructure may increase the industrial concentration in the central municipalities of the northeastern region, and this effect will grow stronger over the years. Our results also confirm the ambiguous effects of improvements in inter-provincial road facilities on manufacturing agglomeration. Moreover, road infrastructure construction, both intra- and inter provincial roads, was clearly not influenced by the location of prior manufacturing firms. Important policy implications appear from our findings for further decision making on road infrastructure expanding or planning in Northeast China, and other less developed regions worldwide with a similar economic and political environment.