Road transportation and economic growth in China: Granger causality analysis based on provincial panel data

This study examines the causal relationship between road transportation and economic growth in 31 provinces and municipalities in China by using province-level panel data covering the period from 1980 to 2015. This study adopts the Granger causality analysis based on meta-analysis in heterogeneous mixed panels. The empirical model also considers the heterogeneity of the coefficients and the cross-sectional correlations of the panel data. The empirical results confirm that the bi-directional causal relation between road transportation and economic development is the dominant type in various provinces and municipalities in China. Moreover, the results reveal a unidirectional causality running from road transportation to economic growth in Beijing, Shanghai, Heilongjiang; a unidirectional causality running from economic growth to road transportation in Tianjin, Fujian and Hunan; and no causal relation in Tibet. The results imply that road transportation and economic growth in most parts of China are mutually coordinated.