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The Poverty Impact of Rural Roads: Evidence from Bangladesh

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  • Shahidur R. Khandker
  • Zaid Bakht
  • Gayatri B. Koolwal

Abstract

A rationale for public investment in rural roads is that households can better exploit agricultural and nonagricultural opportunities to employ labor and capital more efficiently. Significant knowledge gaps persist, however, as to how opportunities provided by roads actually filter back into household outcomes as well as distributional consequences. This study examines the impacts of two rural road-paving projects in Bangladesh using a new quasi-experimental household panel data set surveying project and control villages before and after program implementation. A household panel fixed-effects methodology controlling for initial area conditions is used to estimate the impact of paved roads on household and individual outcomes and account for potential bias in program placement at the village level. Rural road investments are found to reduce poverty significantly through higher agricultural production, lower input and transportation costs, and higher agricultural output prices at local village markets. Rural road development has also led to higher secondary schooling enrollment for boys and girls, as compared to primary school enrollment. We find that road investments have also benefited the poor, meaning the gains are significant for the poor and in some cases disproportionately higher than for the nonpoor. (c) 2009 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 57 (2009)
Issue (Month): 4 (07)
Pages: 685-722

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Handle: RePEc:ucp:ecdecc:v:57:y:2009:i:4:p:685-722

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  1. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, Econometric Society, vol. 46(1), pages 33-50, January.
  2. Jacoby, Hanan G., 1998. "Access to markets and the benefits of rural roads," Policy Research Working Paper Series 2028, The World Bank.
  3. Bryceson, Deborah Fahy & Howe, John, 1993. "Rural household transport in Africa: Reducing the burden on women?," World Development, Elsevier, Elsevier, vol. 21(11), pages 1715-1728, November.
  4. Binswanger, Hans P. & Khandker, Shahidur R & Rosenzweig, Mark R., 1989. "How infrastructure and financial institutions affect agricultural output and investment in India," Policy Research Working Paper Series 163, The World Bank.
  5. Michael Lokshin & Ruslan Yemtsov, 2005. "Has Rural Infrastructure Rehabilitation in Georgia Helped the Poor?," World Bank Economic Review, World Bank Group, World Bank Group, vol. 19(2), pages 311-333.
  6. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 43-61, January.
  7. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, Elsevier, vol. 18(1), pages 5-46, January.
  8. Shenggen Fan & Peter Hazell & Sukhadeo Thorat, 2000. "Government Spending, Growth and Poverty in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 82(4), pages 1038-1051.
  9. Ahmed, Raisuddin & Hossain, Mahabub, 1990. "Developmental impact of rural infrastructure in Bangladesh:," Research reports, International Food Policy Research Institute (IFPRI) 83, International Food Policy Research Institute (IFPRI).
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