DP18429 Geographic Integration and Firm Exports: Evidence from China
This paper examines the impact of transportation infrastructure, designed exclusively to enhance the integration of domestic markets, on a country’s export performance. By leveraging the expansion of China’s high-speed rail (HSR) as a quasi-natural experiment, we provide robust evidence the enhanced within-sector integration that resulted from this infrastructure development significantly boosts firms’ export performance. This impact is observed through increased export sales and volume, expanded market reach, and improved product quality. Our findings are consistent with the notion that HSR connections facilitate knowledge spillovers among exporters, which aids them in overcoming information barriers and thereby improving foreign market access. Importantly, we address potential confounding factors and demonstrate that the findings remain robust when accounting for alternative channels such as supplier and customer access and labor market pooling effects. This study underscores the pivotal role of domestic transportation infrastructure in mitigating information frictions and driving a country’s international market integration.
