Infrastructure, growth, and regional disparities: Looking at efficiency, redistribution, and equity goals in road investments

This paper evaluates the role of transportation infrastructure policies in raising productivity by considering heterogeneities in efficiency, redistribution, and equity. Using a three-step instrumental variable identification strategy, we estimate the causal impacts of road investments on GDP per capita in Brazilian municipalities during the Growth Acceleration Program (PAC), implemented from 2007 to 2018. Our findings show that highway investments significantly increased productivity, particularly in less-developed and poorly connected municipalities. Conversely, returns were lower or insignificant in highly developed and efficient areas, likely due to infrastructure saturation and implementation inefficiencies. These results suggest that road impacts are not homogeneous and that spatial targeting matters. Building on these heterogeneities, we calculate regionalized return rates and identify “focal points” where road investments can achieve both economic efficiency and inclusion objectives. We find that Brazil could have achieved higher overall returns by prioritizing redistributive and spatially equitable investments rather than concentrating resources in already-developed regions. The paper contributes to the literature by jointly analyzing the efficiency, redistribution, and equity dimensions of infrastructure investment and providing policy-relevant evidence on how to improve the design and targeting of national transport programs.