Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing
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.
We are grateful to Partha Mukhopadhyay, Stephen O'Connell, Hyoung Gun Wang and seminar participants for helpful suggestions/comments. We are particularly indebted to Sarah Elizabeth Antos and Henry Jewell for excellent data work and maps. We thank the World Bank's South Asia Labor Flagship team for providing the primary datasets used in this paper. Funding for this project was provided by a Private Enterprise Development in Low-Income Countries grant by the Centre or Economic Policy Research and by World Bank's Multi-Donor Trade Trust Fund. Kerr was a paid short-term contractor of the World Bank for this project. The views expressed here are those of the authors and not of any institution they may be associated with. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing† Ejaz Ghani1, Arti Grover Goswami1 andWilliam R. Kerr2,* Article first published online: 20 APR 2015 DOI: 10.1111/ecoj.12207 © 2014 Royal Economic Society Issue Cover image for Vol. 125 Feature Issue The Economic Journal Early View (Online Version of Record published before inclusion in an issue) citation courtesy of