Manoj Atolia, Bin Grace Li, Ricardo Marto, Giovanni Melina, 09 August 2017

Despite investment in education appearing to be a more pressing need in many developing countries, spending on roads often exceeds that on schools. This column argues that the different pace with which roads and schools contribute to economic growth is central to governments’ optimal allocation decision. Investment in schools tends to lead to a larger long-run increase in output, but the effects are more delayed than for investment in roads. This trade-off contributes to the bias towards roads, in particular when government concerns about debt sustainability and policymakers’ myopia are taken into consideration.

Steve Gibbons, Henry Overman, Teemu Lyytikainen, Rosa Sanchis-Guarner, 27 July 2017

New government policy initiatives aim to reverse the trend of declining investment in Britain’s road network. This column asks whether such investment generates economic benefits, either locally or nationally. Places with improved accessibility from new major roads over 1998-2008 experienced increases in the number of local firms and, consequently, higher local employment. At the same time, businesses already operating in these areas shed workers while maintaining existing levels of output, implying higher labour productivity.

Riccardo Crescenzi, Marco Di Cataldo, Andrés Rodríguez-Pose, 11 April 2017

Transport infrastructure investment is a cornerstone of growth-promoting strategies around the world. However, investment in new infrastructure is not always conducive to stronger economic performance. This column argues that the lack of positive economic returns may be due to institutional failures mitigating the growth effects of public capital expenditures. In contexts marked by weak and inefficient governments and widespread corruption, different types of road investments yield low or no economic returns.

Nishith Prakash, Marc Rockmore, Yogesh Uppal, 17 December 2015

India is electing more and more politicians that are, or have been, accused of criminal activity. This column asks whether accused – and potentially corrupt – politicians influence economic activity by focusing on data from road construction, which is often tied to corruption. The evidence tentatively suggests that caste-based and patronage politics favours lower quality politicians, who in turn deliver benefits to specific groups. This generally leads to lower aggregate growth.

Ejaz Ghani, Arti Grover Goswami, William Kerr, 05 February 2013

Investment in transport plays an important role in a country’s economic development. This column assesses Indian industries that are moving out of the congested big cities in search of cheaper land and buildings, facilitated by major highways. The Golden Quadrilateral highway project -- a huge, country-wide highway building project connecting four major Indian cities -- significantly influences the success of industries’ exodus from the big cities. It is clear that although highway investments are expensive, the costs of not investing may be too high.

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