Working Paper: CEPR ID: DP11283
Authors: Jose Asturias; Manuel GarcSantana; Roberto Ramos Magdaleno
Abstract: A significant amount of resources is spent every year on the improvement of transportation infrastructure in developing countries. In this paper, we investigate the effects of one such large project, the Golden Quadrilateral in India, on the income and allocative efficiency of the economy. We do so using a quantitative model of internal trade with variable markups. We find real income gains of 2.71% in the aggregate and that allocative efficiency accounts for 8% of these gains. The importance of allocative efficiency varies greatly across states, and can account for up to 19% of the overall gains. Thus, allocative efficiency can play an important role in determining both the size and distribution of gains from new infrastructure.
Keywords: Transportation Infrastructure; Allocative Efficiency; Economic Gains; Internal Trade; India
JEL Codes: L91; R42; O18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Golden Quadrilateral (GQ) (C68) | aggregate real income gains (E25) |
| Golden Quadrilateral (GQ) (C68) | allocative efficiency (D61) |
| allocative efficiency (D61) | aggregate real income gains (E25) |
| Golden Quadrilateral (GQ) (C68) | prices for intermediate inputs (L79) |