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Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing

  • Ejaz Ghani

    ()

    (World Bank)

  • Grover Goswami

    ()

    (World Bank)

  • William R. Kerr

    ()

    (Harvard Business School, Entrepreneurial Management Unit)

We investigate the impact of the Golden Quadrilateral (GQ) highway project on the Indian organized manufacturing sector using enterprise data. The GQ project upgraded the quality and width of 5,846 km of roads in India. We use a difference-in-difference estimation strategy to compare non-nodal districts based upon their distance from the highway system. We find several positive effects for non-nodal districts located 0-10 km from GQ that are not present in districts 10-50 km away, most notably higher entry rates and increases in plant productivity. These results are not present for districts located on another major highway system, the North-South East-West corridor (NS-EW). Improvements for portions of the NS-EW system were planned to occur at the same time as GQ but were subsequently delayed. Additional tests show that the GQ project's effect operates in part through a stronger sorting of land-intensive industries from nodal districts to non-nodal districts located on the GQ network. The GQ upgrades further helped spread economic activity to moderate-density districts and intermediate cities.

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Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 13-040.

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Length: 38 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:hbs:wpaper:13-040
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