Transport Infrastructure and Welfare : An Application to Nigeria

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.

Bibliographic Details

Main Authors:	Ali, Rubaba, Barra, Alvaro Federico, Berg, Claudia N., Damania, Richard, Nash, John, Russ, Jason
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-05
Subjects:	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,
Online Access:	http://documents.worldbank.org/curated/en/2015/05/24498118/transport-infrastructure-welfare-application-nigeria http://hdl.handle.net/10986/22004
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