Roads to innovation: evidence from Italy

In this study we leverage on the ancient Roman roads network as a source of exogenous variation in order to identify the causal effect of the modern highways network on innovation using Italian NUTS-3 regional data. Our results suggest that a 10 percent increase in the highways stock in a region causes an increase in the number of patents of about 2-3 percent over a five years period. We document that this positive effect on innovation might in part be explained by a reduction in travel costs that foster collaborations between inventors living in different regions. We also find that the innovation enhancing effect of highways declines over time, possibly because of the introduction of ICT, or the increasing congestion over the Italian network. Finally, we find also evidence of important heterogeneous treatment effects associated to region population density and we cannot rule out the existence of negative spillovers across regions, suggesting possible reorganization of innovative activity across space.