Impacts of International Transport Infrastructure: Evidence from Laos Households

Discussion Papers

No.812

by Magnus Andersson, Kazunobu Hayakawa, Souknilanh Keola, and Kenta Yamanouchi

March 2021

ABSTRACT

This study investigates the impact of international transport infrastructure on household living standards. We propose that a change in the share of food expenditure to total expenditure is a valid indicator of the improvement in living standards by infrastructure in developing countries. We apply this notion to the case of an international bridge between Laos and Thailand and explore its effects on Laos households. Our estimation results by difference-in-differences analysis and propensity score matching method show that establishing an international bridge decreases the share of food expenditure, suggesting that the living standards of the households close to the bridge were improved. Our main results are robust to alternative treatment measurements. Finally, we explored the heterogeneity of the treatment effects using a machine learning approach. We found that although the initial level of the total expenditure affected households’ ability to benefit from the bridge, all households, regardless of their characteristics, could benefit if they were in the districts close to the bridge.

Keywords: International bridge, Trade liberalization, Household

JEL classification: F10, H54, G51

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