Can Transport Infrastructure Reduce Inequality in Archipelagic Economies? Evidence from the Philippine Roll-on/Roll-off Network

The Philippines demonstrates a puzzling disconnect between economic growth and distributional outcomes, as decades of expansion have failed to deliver significant changes in poverty and income inequality. A frequently discussed strategy for inclusive growth is strategic investment in infrastructure, particularly in lagging regions. To augment the limited literature on this topic, this study examines whether transport infrastructure investment can reduce income inequality by exploiting the staggered implementation of the nautical highways included in the Roll-on/Roll-off (RoRo) Terminal System that started in 2003. The staggered adoption design allows for the examination of dynamic treatment effects and determination of whether impacts vary with exposure duration and distance from infrastructure. Using a difference-in-differences approach, this study assesses how infrastructure affects local income and inequalities by comparing outcomes between port municipalities that joined the RoRo network and those that remained conventional ports over the period from 2000 to 2020. Within-municipality inequality is examined through Gini coefficients calculated from asset indices using Census data. The analysis further extends to neighboring municipalities to capture possible externalities. Overall, the findings provide critical empirical evidence on infrastructure’s distributional effects in developing and archipelagic economies. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.