Roads to growth: The Brazilian way

Abstract In this study we analyze the impact of road network extensions on economic development for a panel of industries in a set of Brazilian states observed over the period 2005–2015. We identify the effects of extending the road network using a differences-in-differences research design, where each industry exposure to road network depends on its reliance on transport services. Our main results suggest a positive causal impact of road network expansions on value added. We also find that the economic effects of road network expansions are larger in those states that are more distant from a major seaport and that positive regional spillovers occurred. An extensive set of robustness checks confirms our main findings.