Working Paper: NBER ID: w18524
Authors: Ejaz Ghani; Arti Grover Goswami; William R. Kerr
Abstract: We investigate the impact of the Golden Quadrilateral (GQ) highway project on the Indian organized manufacturing sector using enterprise data. The GQ project upgraded the quality and width of 5,846 km of roads in India. We use a difference-in-difference estimation strategy to compare non-nodal districts based upon their distance from the highway system. We find several positive effects for non-nodal districts located 0-10 km from GQ that are not present in districts 10-50 km away, most notably higher entry rates and increases in plant productivity. These results are not present for districts located on another major highway system, the North-South East-West corridor (NS-EW). Improvements for portions of the NS-EW system were planned to occur at the same time as GQ but were subsequently delayed. Additional tests show that the GQ project's effect operates in part through a stronger sorting of land-intensive industries from nodal districts to non-nodal districts located on the GQ network. The GQ upgrades further helped spread economic activity to moderate-density districts and intermediate cities.
Keywords: Golden Quadrilateral; Highway Project; Indian Manufacturing; Infrastructure; Economic Development
JEL Codes: L10; L25; L26; L60; L90; L91; L92; M13; O10; R00; R10; R11; R14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| GQ project upgrades (C68) | higher entry rates (J68) |
| GQ project upgrades (C68) | increased plant productivity (Q16) |
| GQ project upgrades (C68) | enhanced connectivity and market accessibility (F15) |
| higher entry rates (J68) | more efficient sorting of industries (L99) |
| increased plant productivity (Q16) | total manufacturing activity (L60) |
| GQ project upgrades (C68) | decentralization of industries (L59) |
| GQ project upgrades (C68) | attractiveness of intermediate cities for manufacturing entrants (R12) |