Road Capacity, Domestic Trade and Regional Outcomes

Cosar, Kerem; Demir, Banu; Ghose, Devaki; Young, Nathaniel

doi:10.2139/ssrn.3607988

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Road Capacity, Domestic Trade and Regional Outcomes

EBRD Working Paper No. 241

29 Pages Posted: 22 May 2020

See all articles by Kerem Cosar

Kerem Cosar

Stockholm School of Economics - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); Bogazici University - Center for Economics and Econometrics

Banu Demir

Bilkent University; Centre for Economic Policy Research (CEPR)

Devaki Ghose

University of Virginia

Nathaniel Young

European Bank for Reconstruction and Development (EBRD)

Date Written: May 22, 2020

Abstract

What is the impact on intra-national trade and regional economic outcomes when the quality and lane-capacity of an existing paved road network is expanded significantly? We investigate 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, we estimate a large positive impact of reduced inter-provincial travel times on trade as well as regional industrial sales and employment. A quantitative exercise using a workhorse model of spatial equilibrium implies a rate of return on investment around 70 percent.

Keywords: trade, market access, transportation infrastructure

JEL Classification: F14, R11, R41

Suggested Citation: Suggested Citation

Cosar, A. Kerem and Demir, Banu and Ghose, Devaki and Young, Nathaniel, Road Capacity, Domestic Trade and Regional Outcomes (May 22, 2020). EBRD Working Paper No. 241, Available at SSRN: https://ssrn.com/abstract=3607988 or http://dx.doi.org/10.2139/ssrn.3607988