APL (Ajiken Power Lunch)

Thursday, 3rd of October, 12:00 to 13:15 p.m.

IDE-JETRO C23 Meeting Room 　

Road construction requires a substantial investment in mountainous countries and measuring the economic impact of road infrastructure is key to sound policy making. This paper evaluates the impact of the Sindhuli road on new business establishments in Nepal: new paved roads built in previously mountain trails with the elevation between 200 and 1500 meters for 160 kilometers. I use a unique 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 scores estimator. The results show that the new opening of the road increased the number of new firms in local treatment wards by 108%, their employment by 132%, and their sales by 232%. The impacts are heterogeneous across construction sections, industries, and gender. To infer cost savings in a modal shift from porter to vehicle transportation, I surveyed porter transport prices along mountain trekking routes and show a striking difference in transport prices between porter and vehicle transportation.

Kiyoyasu Tanaka

Masaru Nagashima