Infrastructure, Knowledge and Economic Growth in China: 1953–2004

This paper evaluates the economic development of China using the New Economic Geography (NEG) as a framework of analysis. The NEG addresses the formation of agglomeration economies accruing to physical linkages in one location leading to the formation of a coreperiphery pattern between the regions of a country. However, the NEG cannot account for the role of knowledge creation linkages which are location independent in the formation of the core-periphery pattern. The main findings of this paper are that the formation of the coreperiphery pattern predicted by the NEG depends upon government economic and development policy at a point in time. Furthermore, while the NEG does not allow for knowledge creation to be involved in the formation of the core-periphery pattern, this paper shows that once the core-periphery pattern is formed, the knowledge creation process sustains it. This paper also supports the hypothesis that investment in infrastructure and fixed assets, which has been concentrated in China due to the nature of the Special Economic Zones in the Coastal regions, and the interdependence between different types of infrastructure leads to the formation of the core-periphery pattern.