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Working Paper

Transport Infrastructure and Welfare : An Application to Nigeria

LIVING STANDARDS SANITATION FORECASTS TOTAL REVENUE FREIGHT SERVICES PRICE OF FUEL INCOME INTEREST VEHICLE SPEED EXPECTATIONS TRANSPORT INFRASTRUCTURE PUBLIC ROAD URBAN ROAD TRANSPORTATION COSTS ROUND TRIP FREIGHT TRANSPORT TRANSPORT INFRASTRUCTURES EXPORTS ELASTICITY ECONOMIC STRUCTURE WELFARE TRAVEL SPEED VARIABLES IMPACT OF TRANSPORT COSTS HIGHWAY SYSTEM ROAD INFRASTRUCTURE ROUTES WEALTH TRANSPORT SERVICES TRANSPORT INVESTMENT TRANSPORTATION INFRASTRUCTURE ROAD TYPE TRAVEL COSTS DEVELOPMENT ECONOMIC ACTIVITY VEHICLE INFLUENCE TRANSPORT INVESTMENTS ROAD COSTS DEVELOPMENT ECONOMICS INFRASTRUCTURE REFORM MAXIMUM LIKELIHOOD ESTIMATION ROAD NETWORK ECONOMIC BENEFITS TRANSPORT IMPACT OF TRANSPORT INTERSTATE HIGHWAY SYSTEM COST ELASTICITIES PRODUCTIVITY INDUSTRIALIZATION MARKETS TRUE HIGHWAY IMPROVEMENT LENGTH OF ROAD TRANSPORT FACILITIES ROAD IMPROVEMENT TRAVEL TIMES RURAL ROADS GROSS DOMESTIC PRODUCT CAPITAL INVESTMENTS INVENTORY ROUTE ROAD QUALITY INFRASTRUCTURE SUSTAINABLE TRANSPORT PRODUCTIVITY GROWTH HUMAN CAPITAL ROAD TYPES OPPORTUNITY COST TRAVEL TRANSPORTATION ECONOMIC PERFORMANCE WAGES MODE OF TRANSPORTATION CARS VALUE CREDIT ELASTICITIES INFRASTRUCTURE REHABILITATION ACCESSIBILITY DIRECT ROUTES AGRICULTURE ECONOMIC EFFICIENCY DECISION MAKING MEASUREMENT BENCHMARK INFRASTRUCTURE PROJECTS ROAD PROJECTS HIGHWAYS ECONOMIC THEORY HIGHWAY INFRASTRUCTURE ROAD USER REGRESSION ANALYSIS ROADS CAR WALKING HIGHWAY ADMINISTRATION HIGHWAY TRADE RAILWAYS TRAVEL DISTANCE GDP VEHICLE COST GOODS THEORY TRANSPORTATION COST INVESTMENT AGGLOMERATION ECONOMIES RAILROADS FUEL TRIP REVENUE INVESTMENTS UNDERESTIMATES STATISTICAL ANALYSIS ROAD INVESTMENT ECONOMIC GEOGRAPHY URBAN ROADS DEVELOPMENT PROJECTS TRANSPORT COSTS OUTCOMES ROAD TRANSPORT TRAVEL TIME HIGHWAY CAPITAL FUEL COST FREIGHT INFRASTRUCTURES BENEFITS DEVELOPMENT POLICY
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World Bank, Washington, DC
Africa | Nigeria
2015-06-02T21:28:30Z | 2015-06-02T21:28:30Z | 2015-05

Transport infrastructure is deemed to be central to development and consumes a large fraction of the development assistance envelope. Yet there is debate about the economic impact of road projects. This paper proposes an approach to assess the differential development impacts of alternative road construction and prioritize various proposals, using Nigeria as a case study. Recognizing that there is no perfect measure of economic well-being, a variety of outcome metrics are used, including crop revenue, livestock revenue, non-agricultural income, the probability of being multi-dimensionally poor, and local gross domestic product for Nigeria. Although the measure of transport is the most accurate possible, it is still endogenous because of the nonrandom placement of road infrastructure. This endogeneity is addressed using a seemingly novel instrumental variable termed the natural path: the time it would take to walk along the most logical route connecting two points without taking into account other, bias-causing economic benefits. Further, the analysis considers the potential endogeneity from nonrandom placement of households and markets through carefully chosen control variables. It finds that reducing transportation costs in Nigeria will increase crop revenue, non-agricultural income, the wealth index, and local gross domestic product. Livestock sales increase as well, although this finding is less robust. The probability of being multi-dimensionally poor will decrease. The results also cast light on income diversification and structural changes that may arise. These findings are robust to relaxing the exclusion restriction. The paper also demonstrates how to prioritize alternative road programs by comparing the expected development impacts of alternative New Partnership for Africas Development projects.

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