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The impact of road infrastructure investment on incumbent firms in Korea

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  • Alexander C. Lembcke
  • Carlo Menon

Abstract

This paper develops an indicator that combines the area that residents can reach within a certain time of travel with population density to create a proxy for “accessibility”, i.e. access to employment and consumption opportunities. Using a large scale firm level dataset, with nearly one million firm year observations over 14 years, the paper quantifies the link between firm-level outcomes and the change in accessibility in Korea due to the expansion of the network of major roads. The results suggest that the most productive firms benefited in terms of employment, output, and productivity, as accessibility improved. For the majority of incumbent firms, improved accessibility leaves most balance sheet variables broadly unaffected, but is associated with a decrease in fixed assets. The estimates also suggest that there was little job displacement, with the exception of service sectors where employment increased in response to improved local accessibility and declined for long distance accessibility.

Suggested Citation

  • Alexander C. Lembcke & Carlo Menon, 2017. "The impact of road infrastructure investment on incumbent firms in Korea," OECD Regional Development Working Papers 2017/1, OECD Publishing.
    • Handle: RePEc:oec:govaab:2017/1-en
    DOI: 10.1787/e72fdcb6-en
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    More about this item

    Keywords

    accessibility; capital; employment; firm-level data; highways; productivity; roads;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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