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Does power grid infrastructure stimulate regional economic growth?

Author

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  • Xu, Zhen
  • Das, Debasish Kumar
  • Guo, Wei
  • Wei, Wendong
Abstract
What are the effects of power grid infrastructure investment on the regional economy, and what explains these effects? This paper uses the restricted profit model and a seemingly unrelated regression (SUR) to estimate the short-term and long-term effects of power grid infrastructure on regional economic growth in 30 provinces in China from 1998 to 2017. Our results show that (1) power grid infrastructure investment has a significant positive effect on regional economic growth; (2) the associated long-term impact on the economy is greater than the short-term impact; (3) regions with high energy demands and good industry fundation benefit more from power grid infrastructure in the long term; (4) the output elasticity of power-importing and balancing regions maintained an upward trend after an electricity shortage problem had been solved, while the elasticity in power-exporting regions was positive but steadily decreased because of the resource curse effect. This paper suggests that in the current stage, the power grid infrastructure is a good policy tool to drive regional economies. However, there are differences in investment priorities among different regions.

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  • Xu, Zhen & Das, Debasish Kumar & Guo, Wei & Wei, Wendong, 2021. "Does power grid infrastructure stimulate regional economic growth?," Energy Policy, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:enepol:v:155:y:2021:i:c:s0301421521001658
    DOI: 10.1016/j.enpol.2021.112296
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    5. Caetano, Rafaela Vital & Marques, António Cardoso & Afonso, Tiago Lopes & Vieira, Isabel, 2023. "Could Private Investment in Energy Infrastructure soften the environmental impacts of Foreign Direct Investment? An assessment of developing countries," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 961-977.
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    7. Wenfeng Ge & Xiaodong Yang & Qiying Ran, 2024. "Does Infrastructure Investment Remain an Effective Expansionary Tool? Based On the Green Economy Growth Perspective," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 27(1), pages 99-112, March.
    8. Wang, Hui & Zhang, Yunyun & Lin, Weifen & Wei, Wendong, 2023. "Transregional electricity transmission and carbon emissions: Evidence from ultra-high voltage transmission projects in China," Energy Economics, Elsevier, vol. 123(C).
    9. Jeffrey Kouton & Wilfried Sanogo & Nandi Djomgoue, 2023. "Risk allocation in energy infrastructure PPPs projects in selected African countries: does institutional quality, PPPs experience and income level make a difference?," Economic Change and Restructuring, Springer, vol. 56(1), pages 537-580, February.
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    More about this item

    Keywords

    Power grid infrastructure; Regional economic growth; Short-term impact; Long-term impact;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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