Influence of Opening High-Speed Railway on Economic Growth

Haoran Wen

Beijing Jiaotong University, China

Keywords: Economic Growth, High-Seed Railway.

Abstract: In this paper, 280 cities on the eight vertical and eight horizontal high-speed railway lines in China are taken

as samples, and the GDP and other related economic indicators of each city before and after the opening of

high-speed railway from 2000 to 2019 are selected to study the impact of the opening of high-speed railway

on urban economic growth through regression analysis. Moreover, the data are grouped according to city

level and region and the heterogeneity test is carried out, which enriches the conclusion of this paper. The

final empirical results show that the opening of high-speed rail has a positive role in promoting urban

economic growth.

https://orcid.org/0000-0002-7518-5535

1 INTRODUCTION

With the rapid development of China's economy and

society, high-speed rail has become an important

engine of local economic development and an

important choice for people to travel. The opening of

the high-speed railway not only promotes the

development of local economy, but also is an

important opportunity for local economic

development. With the improvement of China's social

and economic situation, the opening of high-speed

rail has promoted the division of labor and

cooperation among various industries, realized the

industrial upgrading and structural adjustment of

urban construction, and made positive contributions

to the development of cities in China. Throughout the

history of high-speed rail development, it can be

found that the opening of high-speed rail has an

important impact on the development of a city or

region. China has classified the construction of

high-speed rail as an important part of national

construction, and at present, it has initially formed a

"four vertical and four horizontal" rapid passenger

transport network. High-speed rail plays an important

role in China's economic and social development.

Judging from the policies issued by the state and

the overall development trend, China pays more and

more attention to "high-speed rail economy". China's

high-speed railway not only shows China's speed and

technology to the world, but also accelerates its pace

of going abroad. In recent years, China's high-speed

railway has achieved rapid development. In the past

12 years, China has built the world's largest

high-speed railway network with a length of 18,000

kilometers. With its advanced technology and

brilliant achievements, China High-speed Railway

has won the recognition of the world, made great

contributions to the construction of the belt and road

initiative, and has become a beautiful business card

made in China.

This paper studies the impact of China's

high-speed railway on urban economic growth, from

both theoretical and empirical aspects. First of all，it

analyzes the theory of the impact of high-speed

railway on urban economic growth, and then makes a

regression analysis of the impact of high-speed

railway on urban economic growth. Through the

analysis, it is known that the opening of high-speed

rail has a positive role in promoting urban economic

growth.

2 LITERATURE REVIEW AND

THEORETICAL ANALYSIS

Dong Yanmei and Zhu Yingming (2016) used

PSM-DID method to study the impact of high-speed

rail on China's economic growth in 2010-2014,

pointing out that high-speed rail is an important

Wen, H.

Inﬂuence of Opening High-Speed Railway on Economic Growth.

DOI: 10.5220/0012023000003620

In Proceedings of the 4th International Conference on Economic Management and Model Engineering (ICEMME 2022), pages 30-35

ISBN: 978-989-758-636-1

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

measure to promote efficiency and fairness.However,

some scholars believe that the opening of high-speed

rail has negative effects on urban economic growth.

In the research of Zhang Ke Zhong (2016), he

proposed that in terms of the economic structure of

cities with and without high-speed rail, the opening

of high-speed rail can cause changes in the flow and

direction of production factors，such as the labor and

other factors. Therefore, under the action of

agglomeration, the economic gap between cities that

have opened high-speed rail and those that have not

will continue to widen.

In this paper, the literature review of the

economic impact of the opening of high-speed rail is

comprehensive, and only the favorable literature is

reviewed without avoiding the important ones.

Therefore, it can effectively provide relevant support

for the following empirical analysis and test.

The main analysis of this paper is based on the

theories of investment pulling effect and

agglomeration effect. Based on the above literature

review and theory, we put forward the hypothesis:

H1: The opening of high-speed rail has a positive

role in promoting the growth of urban economy.

3 RESEARCH DESIGN

3.1 Data Source

The data in this paper come from CSMAR and

high-speed railway network, and the model is

checked by Excel and Stata15.0. Based on the layout

of eight vertical and eight horizontal high-speed

railway lines, the cities along the high-speed railway

lines from 2000 to 2019 were selected as samples.

Excluding the cities with incomplete and missing

sample data, a total of 5035 groups of valid sample

data were obtained from 280 cities along the route.

3.2 Variable Definition

The explained variable in this paper is the GDP of

each prefecture-level city at the end of each year,

and the GDP of each prefecture-level city at the end

of each year can better represent the economic

growth of each prefecture-level city.

The core explanatory variable of this paper is the

opening of high-speed railway (HW). As for the

value of high-speed rail opening variable, this paper

deals with it as follows: if the high-speed rail is

opened for the first time in a certain place in a

certain year, the explanatory variables of that place

in that year and the following years are all set to 1,

otherwise, the value is 0.

This paper selects the following control variables:

(1) Population growth rate (PR), which is measured

by the year-end population growth rate of each

prefecture-level city; (2) Foreign investment level

(FI), measured by the amount of foreign investment

at the end of each prefecture-level city; (3) The

amount of capital growth (FA), measured by the new

fixed asset investment of each city; (4) The size of

the government (Fin), measured by the fiscal

expenditure in the general budget.

Table 1: Variable definition.

Type Variable Variable explanation Calculation metho

Explained variable GDP Gross Domestic Product

Gross domestic product of

prefecture-level cities at the end of

each yea

lanator

iable HW O

enin

of hi

h-s

eed railwa

en =1, not o

en =0

Control variables

RP Population growth rate

Year-end population growth rate of

refecture-level cities

FI Foreign investment level

Amount of foreign investment at the

end of each

refecture-level cit

FA Capital appreciation

New investment in fixed assets in

each cit

Fin Government scale General bud

etar

enditure

3.3 Econometric Model

𝑮𝑫𝑷

𝒊𝒕

=𝜷

𝟎

+𝜷

𝟏

𝑯𝑾

𝒊𝒕

+𝜷

𝟐

𝑷𝑹

𝒊𝒕

+𝜷

𝟑

𝑭𝑰

𝒊𝒕

+𝜷

𝟒

𝑭𝑨

𝒊𝒕

+𝜷

𝟓

𝑭𝒊𝒏

𝒊𝒕

+𝜸

𝒕

+𝝁

𝒊

+𝜺

𝒊𝒕

GDPit represents the GDP of T city I in the year,

HWit is the opening event of high-speed rail, PRit is

the growth rate of urban population, FIit is the level

of foreign investment, FAit is the amount of capital

growth, Finit is the scale of government, γt is the

fixed effect of time, μi is the fixed effect of

prefecture-level cities, and εit is the random error

term.

Inﬂuence of Opening High-Speed Railway on Economic Growth

4 EMPIRICAL REGRESSION

4.1 Descriptive Statistics

From the Table 2, it can be seen that the data has a

wide range of values, the standard error is too large,

the dispersion trend of the data is also large, and the

representativeness of the mean value is poor, which

may lead to errors in the results.

Table 2: The outcome of descriptive statistics.

Va r Obs Mean SD Min Max

GDP 5035 1396.47 2575 3.242 38155.32

HW 5035 0.281 0.419 0 1

RP 5035 5.774 4.732 -16.5 49.25

Fin 5035 2672014 4976076 33050 83515400

FI 5035 63629 162622 0 3082563

FA 5035 8500756 12779148 49835 174400000

4.2 OLS Regression Results

The GDP of each city is the explanatory variable, the

opening of high-speed railway is the explanatory

variable, and the control variable is added for model

regression.

Table 3: Regression analysis results.

Coefficient

245.21***

（7.36）

-6.196**

（-2.44）

0.003***

（22.04）

0.00005***

（26.47）

Fin

0.00031***

（53.71）

Constant

213.266***

（10.11）

N 5035

0.8977

Note: *** indicates a significant correlation at the 0.01

level (bilateral).

The regression result of the model is remarkable,

with the highest fitting value of 0.8977, The

coefficient of the independent variable (HW) is

245.2058, which is significantly positive at the level

of 1%, indicating that the impact of HW on GDP is

positive and significant; The opening of high-speed

rail can promote the increase of domestic cities'

GDP.

Among the control variables, the coefficients of

foreign investment level (FI) and capital growth (FA)

are 0.003 and 0.0001 and both of them are

significantly positive at the level of 1%. This result

indicates the influence of foreign investment level

and capital growth on GDP is significantly positive.

This may shows that the employment and other

resources are increasing in the cities.

The coefficients of population growth rate (PR)

and government size (Fin) are -6.1960 and 0.0003

and both of them are significant at the level of 1%,

indicating that the influence of government size on

GDP is significantly positive, while that of

population growth rate is significantly negative. It

shows that too fast population growth is not

conducive to economic development, because

overpopulation will bring huge employment

pressure, sufficient labor market, reduced

investment in human capital, and decreased income.

4.3 Expand Analysis

4.3.1 Heterogeneity Analysis of Urban

Grades

According to the administrative level, our cities can

be divided into first-class cities, second-class cities,

third-class cities and other cities. Cities across the

country are divided into different grades according

to certain standards. According to the grades of

cities, this paper studies the effects of the opening of

high-speed rail on the economic growth of the first,

second, third and other cities respectively.

The coefficient of each level city is significantly

positive, Among them, the opening of high-speed

rail has the greatest impact on the economic growth

of first-class cities, and its impact on other cities

decreases according to their grades. Because the

higher the grade, the more developed the city

economy, the larger the city scale and the greater the

ICEMME 2022 - The International Conference on Economic Management and Model Engineering

Table 4: Urban grade heterogeneous regression results.

First-class cit

Secondar

cit

Thir

-level cit

Other cit

8732.8***

（13.75）

3571.51***

（15.91）

2431.81***

（15.08）

1049.11***

（40.21）

Constant

3168.72***

（6.75）

1213.93***

（8.57）

1613.32***

（15.74）

591.30***

（54.27）

N 320 495 478 5270

0.3728 0.3391 0.3232 0.2348

Adj R

0.3708 0.3378 0.3218 0.2347

Note: *** indicates a significant correlation at the 0.01 level (bilateral).

demand for foreign economic exchanges, the local

government is more inclined to invest in the

development of fixed assets such as high-speed rail.

After the opening of high-speed rail, it will greatly

promote the flow of production factors between

cities and regions, especially the rapid flow of labor,

talents, information and other factors.

4.3.2 Regional Heterogeneity Analysis

According to the interpretation of the National

Development and Reform Commission, the division

of China's eastern, central and western regions is a

policy division, not an administrative division, nor a

geographical concept division. Therefore, the eastern

region refers to the region that first implemented the

coastal open policy and has a high level of economic

development; Central China refers to the

economically less developed areas; The western

region refers to the economically underdeveloped

western region. This provides a grouping basis for

studying the economic impact of the opening of

high-speed rail on different regions.

Table 5: Regional heterogeneous regression results.

East region Midland

West

region

3753.60***

（23.23）

1535.82***

（23.99）

1967.95***

（24.54）

Constant

1309.14***

（13.89）

699.11***

（21.63）

474.80***

（17.60）

N 2012 2001 2552

0.2117 0.2235 0.1911

Adj R

0.2113 0.2232 0.1908

Note: *** indicates a significant correlation at the 0.01

level (bilateral).

The coefficient of the eastern region is 3,753.602,

that of the central region is 1,535.818, and that of the

western region is 1,967.95, among which the

coefficient of the eastern region is the highest,

indicating that the opening of high-speed rail has the

greatest impact on the economic development of the

eastern region, followed by the western region,

which has the smallest impact on the central region.

Because the development of economics in eastern

region makes the transportation cost lower, the

transportation time shorter and the promotion. For

example, the operation of Beijing-Shanghai

high-speed railway will closely link the economic

circle around Bohai Sea in Shandong Peninsula and

the Beijing-Tianjin-Tangshan economic circle in

which Beijing is located, with the most prosperous

and economically developed Yangtze River Delta in

China, forming an integrated Beijing-Shanghai

metropolitan belt. It promotes the exchanges among

various regions of the three economic circles and

deepens the links among the three economic circles.

4.3.3 Municipal Analysis

At present, there are four municipalities in China,

namely, Beijing, Tianjin, Shanghai and Chongqing.

Anhui, Fujian, Guangdong, Hebei, Henan, Hunan,

Jiangsu, Jiangxi and Zhejiang are almost all

provinces with high-speed trains, and their

provincial capitals are Hefei, Xiamen, Guangzhou,

Shijiazhuang, Zhengzhou, Changsha, Nanjing,

Nanchang and Hangzhou.

Table 6: Municipal analysis regression results.

Municipal

city

Almost all

provincial

capitals are

opened.

Other city

14588.58***

（10.67）

5503.30***

（9.67）

2357.87***

（46.30）

Constant

5231.74***

（5.16）

1279.22***

（3.96）

726.61***

（30.28）

N 80 180 6485

0.5934 0.3480 0.2485

0.5882 0.3443 0.2484

Note: *** indicates a significant correlation at the 0.01

level (bilateral).

Through the analysis of municipalities directly

under the central government, provincial capitals of

almost all provinces that have opened high-speed

Inﬂuence of Opening High-Speed Railway on Economic Growth

rail and other cities except municipalities directly

under the central government, it can be seen that the

opening of high-speed rail has a positive and

significant impact on economic growth, among

which the highest coefficient of municipalities

directly under the central government is 14,588.58,

followed by the provincial capitals of almost all

provinces that have opened high-speed rail, which is

5,503.296, and the lowest coefficient of other cities

except municipalities is 2,357.8730. It shows that

compared with other developed cities, the opening of

high-speed rail in municipalities directly under the

central government has the greatest impact on

economic development, probably because

municipalities directly under the central government

are transportation hubs, and the opening of

high-speed rail makes its transportation more

developed, promotes population mobility, and

promotes economic development.

5 CONCLUSION

High-speed railway shortens the space-time distance

between cities, accelerates the flow and

agglomeration of production factors, and produces a

huge "space-time convergence" effect. The

regression results show that the opening of

high-speed rail has played a significant positive role

in the economic growth of cities along the line. In

the further analysis of model one, some common

factors of years and cities that cannot be captured are

added, and the impact of high-speed rail on

economic growth reflected by empirical regression

becomes more accurate. It is found that the

introduction of control variables can improve the

explanation degree of high-speed rail opening on

economic growth, which further confirms that the

event of high-speed rail opening will affect

economic development. After a series of extended

analysis, firstly, we divided the samples into four

categories: first-class cities, second-class cities,

third-class cities and other cities according to the city

grades. The results showed that the opening of

high-speed rail had the greatest impact on the

economic growth of first-class cities, and its impact

on other cities declined according to the grades.

Secondly, according to the level of economic

development, the samples are divided into three

categories: eastern, central and western regions.

Finally, through the analysis of municipalities

directly under the Central Government and other

cities, it is concluded that the opening of high-speed

rail has the greatest impact on the economic growth

of municipalities directly under the Central

Government, followed by the provincial capitals of

almost all provinces that have opened high-speed

rail, and the lowest in other cities except

municipalities directly under the Central

Government.

Some suggestions are put forward：some small

and medium-sized cities should not blindly pursue

the high-speed rail, and should objectively analyze

the advantages and disadvantages of its opening.

Secondly, avoiding the phenomenon of excessive

concentration of central cities caused by the

high-speed rail promoting the further concentration

of population and capital in central cities. Finally,

strengthen the scientific management of high-speed

rail operation, and make overall arrangements for

the proportion of passenger trains with various

speeds and the stopping stations and frequencies of

high-speed trains.

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