Valuing Domestic Transport Infrastructure: A View from the Route Choice of Exporters

A key input to quantitative evaluations of transport infrastructure projects is their impact on transport costs. We propose a new method of estimating this impact relying on widely accessible customs data: by using the route choice of exporters. We combine our method with a spatial equilibrium model to study the effects of the massive expressway construction in China between 1999 and 2010. We find transport costs are 20% lower on expressways than on regular roads. The expressways construction increases aggregate exports by 10% and domestic trade by 14%. It generates 5.1% welfare gains, implying a 150% net return to investment.

Keywords: Transport Infrastructure Investment, Domestic Trade Costs; Expressways of China; Export Routing

JEL Classification: R13, R42, F14

Suggested Citation: Suggested Citation

Fan, Jingting and Lu, Yi and Luo, Wenlan, Valuing Domestic Transport Infrastructure: A View from the Route Choice of Exporters (December 15, 2019). Review of Economics and Statistics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3528448 or http://dx.doi.org/10.2139/ssrn.3528448