Road Capacity, Domestic Trade and Regional Outcomes

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

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

A. Kerem Cosar

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Bogazici University - Center for Economics and Econometrics ( email )

Bogazici Universitesi
Bebek
Istanbul, 34342
Turkey

Banu Demir

Bilkent University ( email )

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Devaki Ghose

University of Virginia

1400 University Ave
Charlottesville, VA 22903
United States

Nathaniel Young (Contact Author)

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

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