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Road Capacity, Domestic Trade and Regional Outcomes

November 18, 2021

Kuala Lumpur Research Seminar Series

  • 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 percent 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.


    Presentation Slides

  • Devaki Ghose is an Economist in the Trade and International Integration Unit of the Development Research Group, World Bank. Her primary fields of research are international trade, urban, and development economics.  Her most recent research includes understanding how shocks propagate through supply chains using detailed data on firm-to-firm linkages both within and across national borders. These include understanding whether suppliers are complements or substitutes in production networks and how restrictive trade policies such as import bans and non-tariff measures affect firms’ participation in global value chains.  She is also interested in studying the distributional consequences of trade and infrastructure investments (such as highway development) in developing countries. In this area, her projects analyze how trade, offshoring, and migration responses affect each other via individual and firm responses to economic shocks. She received her PhD in economics from the University of Virginia in 2020.


  • WHEN (KUALA LUMPUR TIME): Thursday, November 18, 2021: 9:00 -10:00am
  • WHEN (ET/WASHINGTON, D.C. TIME): Wednesday, November 17, 2021: 8:00 – 9:00pm