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http://dx.doi.org/10.13106/jafeb.2020.vol7.no12.657

Do Roads Enhance Regional Trade? Evidence Based on China's Provincial Data  

RAHMAN, Imran Ur (Center for Trans-Himalaya Studies, Leshan Normal University)
SHARMA, Buddhi Prasad (Center for Trans-Himalaya Studies, Leshan Normal University)
FETUU, Enitilina (School of Economics, Capital University of Economics and Business)
YOUSAF, Muhammad (School of Economics, University of International Business and Economics)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.12, 2020 , pp. 657-664 More about this Journal
Abstract
We investigate the impact of roads and highways within the provinces on the regional trade of China using the augmented Gravity Model and theory of modeling trade. We take a panel data covering 31 provinces of China over 20 years period (1998-2017) for the estimations. We apply ARMA-OLS model, fixed and random effects, and robust findings by Hausman test. The results imply that road and highway lengths within the provinces have a significantly positive impact on the value of the province-wise exports. The positive impact is due to the fact the increased coverage of roads and highways increase accessibility to resources and mobility of goods and services within the regions. Moreover, employment in the transportation sector, per capita GDP and population of the provinces also illustrate positive and significant influence on regional exports and trade. The impact of China's WTO accession on regional exports has been positive, while the financial crisis has had a negative impact. The year dummies show that, in the years following the financial crisis, China was able to regress from the external shock as trade within the provinces increased. The increase in exports after financial crisis is mainly due to the government policies and support to every province.
Keywords
China; Theory of Modeling Trade; Regional Trade; Gravity Model; Roads and Highways;
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Times Cited By KSCI : 4  (Citation Analysis)
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