Economic Effects of Bypass Roads on National Highway No. 1 in Vietnam

In Vietnam, a lot of bypass roads have been developed on the National Highway No. 1A (NH No. 1A) since 2000. The number of bypass roads developed after 2000 surpasses 90% of the existing bypass roads. The major types of the bypass roads were developed in the provincial capital to avoid traffic congestion. Other types, however, were developed as part of constructing bridges and tunnels. We adopted the technic of instrumental variable regression to estimate the economic effects of new bypass roads. In the first stage regression, we estimated the effects of constructing bridges and tunnels on the bypass development with variables that expressed geographical characteristics. In the second stage regression, we found positive effects of bypass roads on the gross provincial income and provincial monthly income per capita within the own province. Furthermore, the effects of the summed lengths of the bypass roads in other provinces surpass the former effects bypass road developed in its own province and we confirmed the greater mutual effects of bypass road on other provinces.