From Walking to Driving: Economic Impact of Mountain Roads

Kiyoyasu Tanaka

No 949, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper evaluates the impact of Sindhuli Road on new business establishments in Nepal—new paved roads built on previously mountain trails with elevations between 200 and 1500 meters and traversing 160 kilometers. I use a unique Nepalese dataset that surveys all nonfarm establishments in the formal and informal sectors. To reduce selection bias, I adopt the propensity-score weighted regression method combined with the covariate-balancing propensity-score estimator. The results show that opening the road increased the number of new firms in local treatment wards by 108%, employment by 132%, and sales by 232%. The impacts were heterogeneous across construction sections, industries, and genders. To infer transportation cost savings in a modal shift from porter to vehicle, I surveyed porter transport prices along mountain trekking routes and show a striking difference in transport rices between porter and vehicle.

Keywords: Road|transport|firm|informal; sector|gender (search for similar items in EconPapers)
JEL-codes: D22 O17 O18 R42 (search for similar items in EconPapers)
Date: 2024-12
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Published in IDE Discussion Paper = IDE Discussion Paper, No.949. 2024-12

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