Railroad to growth: Evaluating the impact of investments in railroads on firm behaviour

This paper investigates the impact of investments in transport infrastructure on firm performance. Using an original survey of approximately 900 firms in Southern Africa, I estimate the impact of access to a railway on firm sales. Exposure to railway infrastructure is instrumented by geographic proximity to the historical layout of a railway line destroyed by a civil war in the 1980s and rebuilt in 2008. To further account for historical advantages of regions served by the original railway I adopt a differences-in-differences approach that compares the performance of firms in the catchment area of the new railroad to that of firms in other historical transport corridors that planned to rebuild their railroads, but have not yet executed them. Overall, I find limited firm-level gains from access to the railway. I provide suggestive evidence on how the absence of impact may be driven by monopolistic practices of railway parastatals managing access to rail services. These findings highlight important policy complementarities between investments in “hard” and “soft” railway infrastructure.

The data sits under “Additional Materials”. This data is in Stata format. The replication code will replicate Tables 1-19 in the main paper. The data also includes data on bribes, firms, trade flows and gaps. The analysis is based on primary data on firms and bribes, and secondary data on trade flows and trade gaps obtained from the United Nations Comtrade Database (http://comtrade.un.org/db/), for trade between Mozambique, South Africa and the Rest of the World (excluding South Africa) between 2006 and 2014.