Rail transit development in lagging regions: A development-oriented investment and financing approach

Abstract

Transportation infrastructure investment can play a significant role in promoting urban development. How can governments finance expensive rail transit investments and promote urban development in lagging regions? This paper reviews a case in Chongqing, China, a municipality that proactively invested in rail transit development through a mechanism of land value capture and guided rapid urbanization. We use path analysis to test the assumption that the rail transit system investment, which is directly linked to the amount of available government reserve land, was an important determinant in promoting urban development. We found that the availability of government reserve land alone cannot promote urban development. However, building transportation infrastructure on government reserve land serves as the catalyst to foster urban development. We see this development-oriented investment and financing approach as promising for raising funds for rail transit investment in other lagging regions in the world.