TRADE: Checkposts and Local Economic Development; Dr Barthelemy Bonadio (NYU Abu Dhabi)

Abstract:

We document that internal checkposts in India generate local economic activity. Villages located close to checkposts have higher economic activity as measured by nightlight, build-up and number of firms. We leverage a nationwide reform that removed checkposts as a natural experiment, and show that nightlights in villages close to checkposts dropped by around 5% relative to 50km away. We explain our results through the demand generated by truck drivers waiting at the checkpost. The sectoral mix of villages right at the checkpost skews towards sectors that are direct inputs in the inland transportation sector, such as fuel, accommodation and food. Villages nearby exhibit higher indirect exposure to the inland transportation sector.