Journal of Comparative Economics 29, 95–117 (2001) doi:10.1006/jcec.2000.1693, available online at http://www.idealibrary.com on Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China? 1 Sylvie D´ emurger CERDI-IDREC, CNRS—Universit´ e d’ Auvergne, 65, boulevard Franc ¸ois Mitterrand, 63 000 Clermont-Ferrand, France E-mail: S.Demurger@u-clermontl.fr Received March 10, 2000; revised September 14, 2000 D´ emurger, Sylvie—Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China? This paper provides empirical evidence on the links between infrastructure investment and economic growth in China. Using panel data from a sample of 24 Chinese provinces (excluding municipalities) throughout the 1985 to 1998 period, the estimation of a growth model shows that, besides differences in terms of reforms and openness, geographical location and infrastructure endowment did account significantly for observed differences in growth performance across provinces. The results indicate that transport facilities are a key differentiating factor in explaining the growth gap and point to the role of telecommunication in reducing the burden of isolation. J. Comp. Econ., March 2001, 29(1), pp. 95–117. CERDI-IDREC, CNRS—Universit´ e d’Auvergne, 65, boulevard Fran¸ cois Mitterand, 63 000 Clermont-Ferrand, France. C  2001 Academic Press Key Words: infrastructure; economic growth; regional inequalities; panel data; China. Journal of Economic Literature Classification. Numbers: C33, H54, O11, R11. 1. INTRODUCTION In two decades of market-oriented reforms, China has been one of the world’s fastest-growing economies with per capita real incomes more than quadrupling since 1978. Some of the key features of this evolution have been the dramatic 1 This paper is drawn from a research program on “Economic Policy and Growth” funded by the OECD Development Centre. I am indebted to the Development Research Center of the State Council (China), the Academy of Macroeconomic Research of the State Planing Commission (China), and the National Bureau of Statistics (China) for useful discussions on a earlier version, as well as to participants at the International Conference on the Chinese Economy (Clermont-Ferrand, Oct. 22–23, 1998) and the ASSA meeting (Boston, Jan. 7–9, 2000). I am also grateful to two anonymous referees for valuable comments and suggestions. I remain solely responsible for errors and omissions. 95 0147-5967/01 $35.00 Copyright C  2001 by Academic Press All rights of reproduction in any form reserved.