Roads and intra-national trade: Evidence from Italian regions

This paper investigates the role of motorway infrastructurein determining the export propensity of Italian regions. First,exporter fixed effects are estimated using a gravity model.Then, in a second step of the analysis, they are used as aproxy for export propensity and are regressed on highwaysendowment. Since there may be endogeneity issues, toinvestigate the causal relation between highways andexport propensity, ahistorical routeinstrumental variableapproach is followed, using the ancient Roman road net-work as a source of exogenous variation. Results show that,even when controlling for geographic, economic, and histor-ical factors, a 10% increase in the provision of motorwaysleads to about a 1.3–2% increase in exports.