From Walking to Driving: New Firms, Jobs, and Sales Along a Mountain Road Corridor in Nepal

This study examines the economic impact of Sindhuli Road—a 160-kilometer paved road constructed on former mountain trails—on new firm entry in Nepal. Propensity-score-weighted regression is employed to mitigate confounding bias due to the nonrandom placement of mountain roads. Nepal’s 2018 National Economic Census data on all nonfarm establishments are used in conjunction with land maps generated from remote-sensing data. The results show that the opening of Sindhuli Road significantly increased new firm entry, employment, and sales in both formal and informal sectors along the corridor. The effects vary across construction sections, industries, and genders—with pronounced impacts on economic hub regions, the tourism industry, female-led businesses, and female employment. High transportation prices for porters and pack animals suggest that a modal shift toward vehicle transportation along the corridor should substantially reduce transportation costs. Thus, paved roads in mountainous regions promote local economic development in this particular corridor in Nepal.

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Publication Details

Journal
Asian Development Review
Published
2026-03-14
DOI
https://doi.org/10.1142/s0116110526500010
Primary Topic
Fiscal Policy and Economic Growth
Type
article
Field-Weighted Citation Impact
0.00
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article

From Walking to Driving: New Firms, Jobs, and Sales Along a Mountain Road Corridor in Nepal

Kiyoyasu Tanaka
Asian Development Review
Fiscal Policy and Economic Growth
article

From Walking to Driving: New Firms, Jobs, and Sales Along a Mountain Road Corridor in Nepal

Kiyoyasu Tanaka
article en

Abstract

This study examines the economic impact of Sindhuli Road—a 160-kilometer paved road constructed on former mountain trails—on new firm entry in Nepal. Propensity-score-weighted regression is employed to mitigate confounding bias due to the nonrandom placement of mountain roads. Nepal’s 2018 National Economic Census data on all nonfarm establishments are used in conjunction with land maps generated from remote-sensing data. The results show that the opening of Sindhuli Road significantly increased new firm entry, employment, and sales in both formal and informal sectors along the corridor. The effects vary across construction sections, industries, and genders—with pronounced impacts on economic hub regions, the tourism industry, female-led businesses, and female employment. High transportation prices for porters and pack animals suggest that a modal shift toward vehicle transportation along the corridor should substantially reduce transportation costs. Thus, paved roads in mountainous regions promote local economic development in this particular corridor in Nepal.

Asian Development Review
Japan External Trade Organization (JP)
Decent work and economic growth
Openalex Percentile: Top 24%
Fiscal Policy and Economic Growth
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