Working Paper: CEPR ID: DP10113
Authors: Ajay Agrawal; Alberto Galasso; Alexander Oettl
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 Codes: L91; O33; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Highway stock (R48) | Patenting activity (O34) |
| Highway stock (R48) | Knowledge flows (O36) |
| Historical plans (N23) | Highway stock (R48) |
| Historical inventor levels (N63) | Highway stock (R48) |
| Geographic characteristics (R12) | Highway stock (R48) |