Ghani, Grover and Kerr (2013) use a difference-in-difference estimation strategy to compare non-nodal districts based on their distance from the highway system. For the organized portion of the manufacturing sector, the Golden Quadrilateral project led to improvements in both urban and rural areas of non-nodal districts located 0–10 km from the Golden Quadrilateral. The most important difference appears to be the greater activation of urban areas near the nodal cities and rural areas in remote locations along the Golden Quadrilateral network. For the unorganized sector, no material effects are found from the Golden Quadrilateral upgrades in either setting. These findings suggest that in the time frames that we can consider—the first five to seven years during and after upgrades—the economic effects of major highway projects contribute modestly to the migration of the organized sector out of Indian cities, but are unrelated to the increased urbanization of the unorganized sector.
Ghani, E.; Goswami, A.G.; Kerr, W.R. The Golden Quadrilateral Highway Project and Urban/Rural Manufacturing in India. The World Bank, Poverty Reduction and Economic Management Network, (2013) 38 pp. [Policy Research Working Paper No. 6620]