Roads to innovation: Evidence from Italy

Abstract

In this study, we leverage on the ancient Roman roads network as a source of exogenous variation to identify the causal effect of the modern highways network on innovative performance of Italian NUTS-3 regions. Empirical findings suggest that a 10% increase in the highways stock in a region generates an increase in the number of patents of about 3%–4%, over a 5-year period. Further analysis suggests that our findings can in part be explained by a reduction in travel costs that fosters collaborations among inventors living in different regions and by an increase in the degree of centrality in the regional innovation network associated to denser highways networks. Finally, we find that the innovation-enhancing effect of highways declines over time, possibly because of the introduction of information and communication technology, or the increasing congestion on the Italian network.