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Roads and Innovation

Author

Listed:
  • Agrawal, Ajay
  • Galasso, Alberto
  • Oettl, Alexander

Abstract

We study the interplay between transportation infrastructure, knowledge flows, and innovation. Exploiting historical data on planned portions of the interstate highway system, railroads, and exploration routes as sources of exogenous variation, we estimate the effect of U.S. interstate highways on regional innovation. We find that a 10% increase in a region's stock of highways causes a 1.7% increase in regional patenting over a five-year period. We show that roads facilitate the flow of local knowledge and allow innovators to access more distant knowledge inputs. This finding suggests that transportation infrastructure may spur regional growth above and beyond the more commonly discussed agglomeration economies that are predicated on an inflow of new workers.

Suggested Citation

  • Agrawal, Ajay & Galasso, Alberto & Oettl, Alexander, 2014. "Roads and Innovation," CEPR Discussion Papers 10113, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10113
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    More about this item

    Keywords

    Regional growth; Innovation; Transportation; Highways;
    All these keywords.

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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