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Road Capacity, Domestic Trade and Regional Outcomes

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  • Cosar,Kerem
  • Demir,Banu
  • Ghose,Devaki
  • Young,Nathaniel Virgil C

Abstract

What is the impact on intranational trade and regional economic outcomes when the quality and lane capacity of an existing paved road network is expanded significantly This paper investigates this question for the case of Turkey, which undertook a large-scale public investment in roads during the 2000s. Using spatially disaggregated data on road upgrades and domestic transactions, the paper estimates a large positive impact of reduced travel times on trade as well as local manufacturing employment and wages. A quantitative exercise using a workhorse model of spatial equilibrium implies heterogeneous effects across locations, with aggregate real income gains reaching 2–3 percent in the long run. Reductions in travel times inc reased the local employment-to-population ratio but had no effect on local population. The model is extended by endogenizing the labor supply decision to capture this finding. The model-implied elasticity of employment rates to travel time reductions captures about one-third of the empirical elasticity.

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  • Cosar,Kerem & Demir,Banu & Ghose,Devaki & Young,Nathaniel Virgil C, 2021. "Road Capacity, Domestic Trade and Regional Outcomes," Policy Research Working Paper Series 9772, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9772
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    2. Daniel Riera-Crichton & William Maloney & Guillermo Vuletin & Elena Ivanova Ianchovichina & Guillermo Beylis & Guillermo Vuletin, "undated". "The Promise of Integration: Opportunities in a Changing Global Economy [El Potencial de la Integración: Oportunidades en una Economía Global Cambiante]," World Bank Publications - Reports 39612, The World Bank Group.
    3. Cosar,Ahmet Kerem, 2022. "Overland Transport Costs : A Review," Policy Research Working Paper Series 10156, The World Bank.
    4. Han Zhang & Dongli Wu, 2022. "The Impact of Transport Infrastructure on Rural Industrial Integration: Spatial Spillover Effects and Spatio-Temporal Heterogeneity," Land, MDPI, vol. 11(7), pages 1-18, July.

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    More about this item

    Keywords

    International Trade and Trade Rules; Transport Services; Labor Markets; Roads & Highways; Inter-Urban Roads and Passenger Transport; Roads and Highways Performance;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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