Causality between logistics infrastructure and economic development in China

Since the economic reform in 1978, the Chinese economy has grown at a remarkable pace in the past few decades. Among a plethora of factors contributing to the growth of China, this paper pays a particular attention to the logistics infrastructure that is widely cited as a major catalyst for economic development of a country. The causal relationship between the logistics infrastructure and the economic development in China for the period 2000-2017 is examined under the Vector Autoregressive (VAR) and the Vector Error Correction Model (VECM) frameworks. This study documents the long-run equilibrium between the logistics infrastructure and the economic development in China and causality, in general, running from the former to the latter. Especially, it is also found that the infrastructure related to maritime transport plays a key role in promoting the Chinese economy and international trade.