Port infrastructure and regional economic growth in China: a Granger causality analysis

Ports in China play an important role in the transportation and economic system, especially for the cities where ports are located and the hinterland they serve. The question is what is the causality between port investment and economic growth in China? The answer to this question could provide a basis and better rationale for the port authorities or central and local governments in their investment decision-making process. This article investigates the Granger causality between port investment and economic growth in China both at the full regional level and the sub-regional level. By applying the panel data for the period of 19992009, the error correction model (ECM) is employed to test the Granger causality between port investment and economic growth. The results show that short-term bidirectional causality exists between port investment and economic growth, and the port investment is the long-term Granger reason for economic growth; however, economic growth is not the long-term Granger reason for port investment, namely that the long-term unidirectional causality exists running from port investment to economic growth.