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Study Overview

The impact of economic corridors on economic activity and pollution
Study is 3ie funded:
Study ID:
Initial Registration Date:
Last Update Date:
Study Status:
In Development

This study aims at evaluating the impact of major road infrastructure projects in Pakistan on travel time, local economic activity and air quality. These  Using secondary data sources and employing instrumental variables and an event study design , the study will estimate short and medium-term impacts of infrastructure investments. The data sources used include satellite imagery (daytime and nighttime lights) and survey data on income. The study will bring useful knowledge on the wider benefits of transport investments to the development community.

Registration Citation:
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Principal Investigator(s)

Name of First PI:
Alice Duhaut
The World Bank
Name of Second PI:

Study Sponsor

Study Sponsor Location:
United Kingdom

Research Partner

Name of Partner Institution:
United States

Intervention Overview


The study evaluates the impact of four corridor projects to improve connectivity between Islamabad and Khyber Pakhtunkhwa and the Northern Areas, improving the connection to China and East Asian neighbors, and between East and West.


Theory of Change:

Road construction projects and upgrades are expected to lead to safer and less congested roads. In turn, a decrease in travel time will lead to a decrease in transportation costs and an increase in market access. This has several implications for  local economic activity and pollution.

The project will lead to heterogeneous improvements in market access. According to the predictions of the standard spatial quantitative model, regions that benefit from an improvement in market access will be able to access cheaper goods and reach more consumers. These regions will become more attractive for firms and workers. We expect these regions to experience an increase in population and an increase in land prices that will partly off-set the benefits from the transport improvements.

The increase in market access should also stimulate economic activity in the newly connected areas, such that new firms would be created around the corridors, in regions with better access to markets. We thus expect newly connected areas to see an increase in the local population, local output and possibly an increase in real income.

Finally, the effect on the environment is unclear: while the reduction in transport time should lead to reduction in emissions and air pollution, the induced traffic may increase air pollution. 

Multiple Treatment Arms Evaluated?

Implementing Agency

Name of Organization:
Government of Pakistan
Type of Organization:
Public Sector, e.g. Government Agency or Ministry

Program Funder

Name of Organization:
Type of Organization:
Foreign or Multilateral Aid Agency

Intervention Timing

Intervention or Program Started at time of Registration?
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Evaluation Method

Evaluation Method Overview

Primary (or First) Evaluation Method:
Instrumental variables
Other (not Listed) Method:
Additional Evaluation Method (If Any):
Difference in difference/fixed effects
Other (not Listed) Method:

Method Details

Details of Evaluation Approach:

Given the impossibility to randomize road placement, the study uses an evaluation design that is feasible from an operational perspective: an event study design for travel time and pollution; and differences-in-differences and instrumental variables for measuring local economic activity.

With respect to environmental concerns, the study will draw on a blossoming literature that uses satellite imagery to infer the level of air pollution on a point at a moment in time. Though the expected road-opening months were announced by the implementing partners, uncertainty still exists about the inauguration date given idiosyncratic factors such as construction delays and public decisions. This provides plausibly exogenous temporal variations in road access, which satisfy the identification requirement for using event-study design.

For measuring local economic activity, the study relies on incidental unit argument: while the road placement is not random, the justification for adding elements to the network is to improve the connection between cities, not areas that fall between. The study intends to use an instrumental variable approach to address the non-endogeneity of the road placement when comparing outcomes. Following Faber (2013), we construct least cost paths connecting cities as instruments, and model these into reduced form and general equilibrium models to quantify the gains from road construction for different regions as well as the country as a whole, in terms of welfare and real income.

Outcomes (Endpoints):

Outcomes are transport time, air pollution level and declared income.

Unit of Analysis:

1. Road construction projects and upgrades are excpected by the program to lead to safer and less congested roads, and a reduction in travel time.

2. Pollution level in nearby areas are affected by the opening of the road.

3. Increase in market access is excepected to lead to increase in income in the areas beneffiting from a better connection.

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Outcomes Data

Transport time between 12 major cities in Pakistan For each segment/route, week average Local GDP per capita as proxied per by nighttime lights For all Pakistan, 750 meters pixels, monthly Pakistan Social and Living Standard Survey District level, bi-annual Level of N Ox in atmosphere Modis satellite imagery
Data Already Collected?
Data Previously Used?
Not sure
Data Access:
Not restricted - access with no requirements or minimal requirements (e.g. web registration)
Data Obtained by the Study Researchers?
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Treatment Assignment Data

Participation or Assignment Information:
Data Obtained by the Study Researchers?
Data Previously Used?
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Data Obtained by the Study Researchers?
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Data Analysis

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Study Materials

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Registration Category

Registration Category:
Non-Prospective, Category 4: Data for measuring impacts have been obtained/collected by the research team and analysis for this evaluation has started

Completion Overview

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Preliminary Report:
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Data Availability

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Other Materials

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Description of Changes:

Study Stopped