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Roads and Innovation

Ajay Agrawal¹; Alberto Galasso¹; Alexander Oettl²

¹ University of Toronto and NBER · ² Georgia Institute of Technology

We exploit historical data on planned highways, railroads, and exploration routes as sources of exogenous variation in order to estimate the effect of interstate highways on regional innovation: a 10% increase in a region's stock of highways causes a 1.7% increase in regional patenting over a five-year period. In terms of the mechanism, we report evidence that roads facilitate local knowledge flows, increasing the likelihood that innovators access knowledge inputs from local but more distant neighbors. Thus, transportation infrastructure may spur regional growth above and beyond the more commonly discussed agglomeration economies predicated on an inflow of new workers.

DOI

10.1162/rest_a_00619

Volume

99 (3)

Pages

417-434

Language

en

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