Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing

Abstract

We investigate the impact of transport infrastructure on the organisation and efficiency of manufacturing activity. The Golden Quadrilateral (GQ) project upgraded a central highway network in India. Manufacturing activity grew disproportionately along the network. These findings hold in straight-line IV frameworks and are not present on a second highway that was planned to be upgraded at the same time as GQ but subsequently delayed. Both entrants and incumbents facilitated the output growth, with scaling among entrants being important. The upgrades facilitated better industrial sorting along the network and improved the allocative efficiency of industries initially positioned on GQ.