A New Approach to Measure the Impact of Highways on Business Location with and Application to Spain

• Authors: Teresa Garcia-Milà and José García-Montalvo.
• BSE Working Paper: 110237 | September 15
• Keywords: firms' location , infrastructure , geographic information system
• JEL codes: R4, O4, R58
• firms' location
• infrastructure
• geographic information system

In this paper we present a new approach to measure the effect of infrastructures on firms’ location. We use fixed size rectangles around the roads as the unit of analysis instead of the traditional approach based on regions or municipalities. We apply this approach to Spain, which is an interesting case since during the period 1984-2000 there was a very active process of increasing the capacity of roads by transforming national roads into highways/dual carriageways. The results show that the transformation of national roads into high capacity roads did not increase the number of firms in the catchment area relative to the non-treated group.