Bridge to bigpush or backwash? Market integration, reallocation and productivity effects of Jamuna Bridge in Bangladesh

Abstract

We study the effects of Jamuna Bridge in Bangladesh that reduced the average trade costs by 50% and connected 26 million people by road to the capital city. We use a difference-in-difference design where the isolated Padma hinterland constitutes the comparison. Balance tests for an array of economic characteristics support the parallel trends assumption. The bridge led to economic revival in the Jamuna hinterland with increased agricultural productivity and population density despite a decline in the share of manufacturing employment. The effects are spatially heterogeneous with substantial manufacturing decline in the middle subregion, and the remote areas reaping the highest benefits.