Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries

This paper studies the causal effect of transport infrastructure on the spatial distribution of economic activity within subnational regions in a large number of developing countries. To do so, we introduce a new global dataset of geolocated Chinese development finance projects over the period from 2000 to 2014 and combine it with measures of spatial concentration based on remotely-sensed data. We find that Chinese-financed transportation projects reduce spatial concentration within regions. Transport projects decentralize economic activity particularly strongly in regions that are more urbanized, located closer to a city, and less developed.

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