Tracks to growth: does railway investment promote industrial development?

Ng, Bryan; Gourevich, Isabella; Münch, Markus; Lim, Timothy

Tracks to growth: does railway investment promote industrial development?

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Ng, B, Gourevich, I, Münch, M, Lim, T. Tracks to growth: does railway investment promote industrial development?. 2021. handle: http://hdl.handle.net/10230/49135

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Abstract

In 2016, the first shipment left Ethiopia’s capital for Djibouti port, which handles 90% of Ethiopia’s international trade. The revolutionary 753km single-track electrified railway reduced the journey from 84 hours to 15 hours. We provide a micro evaluation of the project and its implications for the manufacturing sector, through a difference-in-difference regression using two years of Ethiopian firm-level data. While the railway increased sales by 20.6%, value-added by 19.7%, and firm size by 11.1%, we find heterogeneous size effects and adverse distributional effects. We conclude that transportation investments in Africa must be complemented by transitions in production technologies, educational investments, and regional redistribution.

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Treball fi de màster de: Master's Degree in Specialized Economic Analysis: International Trade, Finance and Development. Curs 2020-2021
Directors: Fernando Broner, Manuel García-Santana i Maria Ptashkina