How Does Transport Infrastructure Shape Industrial Competitiveness? A Perspective From Industry Dynamics

How do improvements in transport infrastructure shape industrial competitiveness? Previous studies have emphasized the role played by agglomeration economies, with the contribution of industry dynamics largely being overlooked. In order to fill this gap, in this article we have researched the impact of improved transport infrastructure on industrial competitiveness, and we have put forward a new mechanism considering industry dynamics. Based on a sample of Chinese manufacturing firms over the period of 1998–2007, we have examined the impact of improvements to transport infrastructure on the exit and entry of firms from the market. The empirical findings confirm that improved transport infrastructure leads to the exit of less productive incumbents and increases the average productivity of new entrants in the market, and show that this effect is more significant for nonrelationship industries. This demonstrates that transport infrastructure promotes industrial competitiveness by reshaping the evolution of industry dynamics. This article contributes to academic literature on infrastructure management, exploring a new mechanism for explaining the impact of improved transport infrastructure on industrial competitiveness. It also provides some guidance to, and entails certain practical implications for, the development of emerging economies.