Competition and the welfare gains from transportation infrastructure : evidence from Golden Quadrilateral of India Jose Asturias, Manuel García - Santana, Roberto Ramos
By: Asturias, José
.
Contributor(s): García Santana, Manuel | Ramos, Roberto.
Material type: 
TextSeries: Banco de España. Documentos de trabajo ; 1816.Publisher: Madrid Banco de España 2018Description: 73 p. : gráf. ; 30 cm.Subject(s): INFRAESTRUCTURAS | TRANSPORTES | COMERCIO INTERIOR | BIENESTAR SOCIAL | INDIAOnline resources: Click here to access online Summary: A significant amount of resources is spent every year on the improvement of transportation infrastructure in developing countries. In this paper, we investigate the effects of one such
large project, the Golden Quadrilateral in India. We do so using a model of internal trade with variable markups. In contrast to the previous literature, our model incorporates several channels through which transportation infrastructure affects welfare. In particular, the model accounts for gains stemming from improvements in the allocative effi ciency of the economy.
We calibrate the model to the Indian manufacturing sector and fi nd real income gains of 2.7%. We also fi nd that allocative effi ciency accounts for 7.4% of these gains. The importance
of allocative effi ciency varies greatly across states, and can account for up to 18% of the overall gains in some states. The remaining welfare gains are accounted for by changes in
labor income, productive effi ciency, and average markups that affect states’ terms of trade.
| Item type | Current location | Home library | Call number | URL | Status | Date due | Barcode |
|---|---|---|---|---|---|---|---|
| Recursos electrónicos | IEF | IEF | OL 332 (Browse shelf) | https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/18/Files/dt1816e.pdf | Available | OL 332 |
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Resumen.
Bibliografía.
A significant amount of resources is spent every year on the improvement of transportation infrastructure in developing countries. In this paper, we investigate the effects of one such
large project, the Golden Quadrilateral in India. We do so using a model of internal trade with variable markups. In contrast to the previous literature, our model incorporates several channels through which transportation infrastructure affects welfare. In particular, the model accounts for gains stemming from improvements in the allocative effi ciency of the economy.
We calibrate the model to the Indian manufacturing sector and fi nd real income gains of 2.7%. We also fi nd that allocative effi ciency accounts for 7.4% of these gains. The importance
of allocative effi ciency varies greatly across states, and can account for up to 18% of the overall gains in some states. The remaining welfare gains are accounted for by changes in
labor income, productive effi ciency, and average markups that affect states’ terms of trade.
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