Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325018 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12027
Publisher: 
CESifo GmbH, Munich
Abstract: 
We evaluate how access to international transport infrastructure promotes trade and economic development. Exploiting the gradual unfolding of transcontinental rail freight connections between China and Europe, our empirical findings indicate increasing exports from connected cities, with positive spillovers to neighboring cities and other indicators economic activity. Not all products and cities are equally responsive to new rail export opportunities. We set up a multi-sector heterogeneous firms model with a rich specification of trade costs, in which firms optimize trade costs by choosing alternative transportation modes and routes. Leveraging a unique data set on trade flows between Chinese cities, we calibrate our model to discuss local welfare effects, relying on sufficient statistics that quantify changes in city-level trade costs. We also highlight significant spatial distributional effects of trade infrastructure development.
Subjects: 
transport infrastructure
trade
regional development
China
JEL: 
F14
F15
R11
R41
Document Type: 
Working Paper
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