Road Capacity, Domestic Trade and Regional Outcomes
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...
| Main Authors: | , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/629521631537099144/Road-Capacity-Domestic-Trade-and-Regional-Outcomes http://hdl.handle.net/10986/36280 |
| Summary: | 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 increased 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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