Roads, Trade, and Development: Evidence from the Agricultural Boom in Brazil
Presented by:
Xi He
Iowa State University
Friday, January 28, 2022
12:00 pm-1:30 pm
Taylor-Hibbard Seminar Room (Rm103)
Online - https://go.wisc.edu/jmydkq
We utilize a triple-differences framework to quantify the impacts of domestic road connectivity on agricultural and economic outcomes before and after the mid-1990s trade reforms for municipalities with high and low soybean production potential in Brazil. We use a municipality's distance to a road network that consists of the 1960 road network and straight lines connecting major capitals as the instrument for the municipality's road access in later years. We nd consistent and robust evidence that while better road connectivity increases GDP per capita in regions with high soybean production potential after the trade reform, better road connectivity decreases GDP per capita in regions with low soybean production potential after the trade reform. We also find that better road connectivity leads to significantly lower soybean/corn harvested acres and yield in nonagricultural regions after the trade reform but leads to higher soybean harvested area and yield in the agricultural frontier in the central west. These fi ndings highlight the interactive role of domestic and international market access in promoting spatial growth patterns that are consistent with a region's comparative advantage in export markets and also highlight the role of the export-led agricultural boom in complementing the impacts of road access on economic growth in developing countries like Brazil.
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