Roads and Innovation

45 Pages Posted: 30 Sep 2014

See all articles by Ajay Agrawal

Ajay Agrawal

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Alberto Galasso

University of Toronto - Strategic Management

Alexander Oettl

Georgia Institute of Technology - Strategic Management Area

Multiple version iconThere are 2 versions of this paper

Date Written: August 2014

Abstract

We study the interplay between transportation infrastructure, knowledge flows, and innovation. Exploiting historical data on planned portions of the interstate highway system, railroads, and exploration routes as sources of exogenous variation, we estimate the effect of U.S. interstate highways on regional innovation. We find that a 10% increase in a region's stock of highways causes a 1.7% increase in regional patenting over a five-year period. We show that roads facilitate the flow of local knowledge and allow innovators to access more distant knowledge inputs. This finding suggests that transportation infrastructure may spur regional growth above and beyond the more commonly discussed agglomeration economies that are predicated on an inflow of new workers.

Keywords: highways, innovation, regional growth, transportation

JEL Classification: L91, O33, O47

Suggested Citation

Agrawal, Ajay and Galasso, Alberto and Oettl, Alexander, Roads and Innovation (August 2014). CEPR Discussion Paper No. DP10113. Available at SSRN: https://ssrn.com/abstract=2501585

Ajay Agrawal (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alberto Galasso

University of Toronto - Strategic Management ( email )

Canada

Alexander Oettl

Georgia Institute of Technology - Strategic Management Area ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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