Will infrastructure construction drive Chinese rural families to develop their own enterprises?

ABSTRACT

China’s infrastructure construction has continued its acceleration for the past decade. Such investment boosts the economic activities by introducing new products and new markets in rural China as well as other regions. And rural entrepreneurship augments the economic value of the rural areas by introducing new methods of production. Will the construction of rural infrastructure have an impact on rural families’ entrepreneurship? Using the 2018 China Family Panel Survey, we employed the binary choice model with instrumental variable method to empirically evaluate the impact of infrastructure construction on rural household entrepreneurship. We found the construction of post, and railway demonstrated a positive incentive effect on rural families’ entrepreneurship, in contrast with the lack of influence on rural families’ entrepreneurship by the construction of electricity and roadways. Further policies may encourage rural entrepreneurs to use the publically available electricity and roadways when diversifying their resources for non-agricultural use.

KEYWORDS:

• Infrastructure construction
• rural household entrepreneurship
• instrumental variable method

JEL CLASSIFICATION:

• D13
• Q12
• Q18

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This study was supported by the Department of Education [No. 1125000172], National Natural Science Foundation of China [Grant Number: 71704192] and Fundamental Research Funds for the Central Universities [No. 3225002002A1]. These funders have no roles in study design, data collection and analysis, preparation of the manuscript, or decision to publish.