Transportation infrastructure, comparative advantage, and regional specialization: Evidence from China's high-speed railway network

Using the quasi-natural experiment of China's high-speed railway (HSR), this paper investigates the impact of transportation infrastructure on regional specialization, focusing on the differential effects on sectors with varying degrees of comparative advantages. Constructing a multi-region and multi-sector spatial economic model that includes Ricardian comparative advantage, we find that the reduction in trade costs leads to increases in market access but also intensifies local market competition, disproportionately benefiting sectors with comparative advantages. Empirical analysis of prefecture-level data from 2006 to 2016 reveals that HSR connection positively impacts industries with comparative advantages, but has negative impacts on industries without comparative advantages. This research introduces a new mechanism by which transportation infrastructure influences regional specialization: it disproportionately benefits industries with initial comparative advantages, thereby accelerating their growth relative to industries without comparative advantages. The findings provide valuable insights for policymakers aiming to optimize industrial structure planning in HSR-connected cities. Specifically, policymakers should consider both the reliance on HSR transportation and initial comparative advantages when planning industrial structures.