Multiple pathways of transportation investment to promote economic growth in China: a structural equation modeling perspective

Abstract

Transportation investment has served as one of the most promising economic instruments to lower transportation costs and promote economic growth. To enhance the effectiveness and efficiency of such kind of capital investments, one critical issue is to gain a better understanding of the pathways that transportation investment would have to influence economic growth. By using a provincial panel data in China, this study attempts to investigate how transportation investments impact economic growth through a variety of pathways. Structural equation modeling (SEM) is applied to understand the relationship between transportation investment, investment in relevant sectors, industrial structure, employment growth, and economic development. It finds that investment in transportation sectors can promote economic growth through direct and multiple indirect pathways. The indirect pathways can improve economic performance through the investments in relevant sectors, growth of industry and employment growth. These impacts would be significantly changed under diverse spatial and temporal conditions.