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Road capacity, domestic trade and regional outcomes
[Trade and the topography of the spatial economy]

Author

Listed:
  • A Kerem Coşar
  • Banu Demir
  • Devaki Ghose
  • Nathaniel Young

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 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% in the long-run. Reductions in travel times increased local employment-to-population ratio but had no effect on local population. We extend the model 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.

Suggested Citation

  • A Kerem Coşar & Banu Demir & Devaki Ghose & Nathaniel Young, 2022. "Road capacity, domestic trade and regional outcomes [Trade and the topography of the spatial economy]," Journal of Economic Geography, Oxford University Press, vol. 22(5), pages 901-929.
    • Handle: RePEc:oup:jecgeo:v:22:y:2022:i:5:p:901-929.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbab045
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    Citations

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    Cited by:

    1. Branco, Catarina & Dohse, Dirk C. & Pereira dos Santos, João & Tavares, José, 2023. "Nobody’s gonna slow me down? The effects of a transportation cost shock on firm performance and behavior," Journal of Urban Economics, Elsevier, vol. 136(C).
    2. Despina Gavresi & Anastasia Litina & George Tsiachtsiras, 2022. "Railways and Roadways to Trust," Discussion Paper Series 2022_08, Department of Economics, University of Macedonia, revised Sep 2022.
    3. Bottasso, Anna & Conti, Maurizio & Santagata, Marta, 2022. "Transport Infrastructure and Trade: A Survey of the Empirical Literature," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 75(4), pages 447-464.
    4. Marta Santagata, 2022. "Roads and intra‐national trade: Evidence from Italian regions," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1383-1409, December.

    More about this item

    Keywords

    Trade; market access; transportation infrastructure;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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