Rural Roads and Local Economic Development

Abstract

Nearly one billion people worldwide live in rural areas without access to national paved road networks. We estimate the impacts of India’s 40 billion USD national rural road construction program using a fuzzy regression discontinuity design and comprehensive household and firm census microdata. Four years after road construction, the main effect of new feeder roads is to facilitate the movement of workers out of agriculture. However, there are no major changes in agricultural outcomes, income, or assets. Employment in village firms expands only slightly. Even with better market connections, remote areas may continue to lack economic opportunities. This research is part of the Gender, Growth and Labour Markets in Low-Income Countries programme