Spatial Integration and Agricultural Productivity: Quantifying the Impact of New Roads

I study the effects of Ethiopia's 1997–2014 road expansion program on agricultural productivity and structural change by combining a quantitative spatial sectoral framework with novel district-level panel data on agricultural production and geocoded transport costs. In the model, the spatial heterogeneity of transport costs affects the distribution of production and mobile inputs across locations and sectors, and the allocation of land across crops within locations. Varying transport costs to their new actual levels, the model delivers substantial structural change, a rise in agricultural productivity onetenth of the data, and a pattern of productivity gains across districts consistent with the data. (JEL H54, O13, O18, Q11, Q13, R42, R53)