IZA DP No. 15454: Revitalising the Silk Road: Evidence from Railway Infrastructure Investments in Northwest China
China’s Belt and Road Initiative was introduced in 2013 to revitalise the Silk Road and promote economic development and integration. This paper investigates the economic effects of the opening of the only high-speed rail (HSR) line in northwest China which connects China’s northwestern provinces along this Silk Road land route. We use a recently developed machine-learning extended nightlight data series from 2000 to 2019 and employ the ridge augmented synthetic control method (Ben-Michael et al., 2021) to assess the effects of the HSR line connection on economic activity along this Silk Road land route. We further propose an algorithm that helps automate the donor pool selection process while ensuring optimal pre-treatment fitness. Our results show that there are winners and losers from the opening of the Lanzhou–Urumqi HSR line. While there is some indication of the role that HSR can help play in making progress towards breaking through the Hu Huanyong Line, a geographical demarcation in China that is of vast economic significance, not all counties benefited from the opening of the HSR line.