Highways and Spatial Development

This Economic Premise examines the link between highways and spatial development. The Golden Quadrilateral (GQ) highway project in India—5,846 km of highways linking four major urban hubs—improved the connectivity and market accessibility of districts close to the highway compared to those more removed. Non-nodal districts located within 0–10 km from the highway experienced substantial increases in entry of new enterprises. The highways facilitated a more natural sorting of industries that are land and building intensive, improved efficiency in the manufacturing industries, and encouraged decentralization of urban transformation by making intermediate cities more attractive. Understanding these patterns is important for policy makers, because well-targeted infrastructure projects can improve resource reallocation, accelerate spatial development, and also promote shared prosperity.