an area benefited from RSDP. Yet, many areas benefited from RSDP road improvements in multiple years. Long-difference approaches alleviate this concern by examining aggregate changes in the road network, but they require stronger assumptions for causal interpretations to be valid. Consequently, we emphasize findings that appear consistent across the multiple approaches.

Ethiopia’s RSDP is now in its fifth phase, with each phase focusing on different priorities. The first three phases (1997–2010) focused on improving trunk roads and regional roads, while the fourth and fifth phases (2010–2020) focused on rural roads to support the development of commercial agriculture. The vast majority of upgrades took place in the fourth and fifth phases (Figure 1). Using data on road upgrades from 1997 to 2016, our analysis focuses on RSDP phases I-IV. Aggregating across phases, we find that road upgrades contributed to increases in local economic activity (proxied by nighttime lights) and urbanization. However, the aggregate results mask heterogeneity in results across baseline levels of economic activity. Specifically, while areas with moderate to high initial economic activity benefited the most from the upgrades, we have mixed evidence for areas with low initial economic activity. The differences-in-differences and long-difference models show that these areas either did not benefit or only saw small gains from upgrades, and market access results show these areas either did not benefit or even saw a reduction in outcomes due to upgrades. Lastly, we find that road upgrades contributed to a reduction in cropland in areas with moderate to high initial economic activity; these cropland areas largely transitioned to urban land.

We contribute to multiple strands of the literature. First, we contribute to a young literature on the effects of transportation infrastructure on economic development in Ethiopia. Several recent papers have examined the effect of Ethiopia’s RSDP on firm-level outcomes. For example, Fiorini et al. (2021) focus on the role of road infrastructure on the effect of trade. Using the Ethiopia manufacturing census from 1998 to 2009 to construct measures of firm productivity, they find that better local road infrastructure increases the benefits from lowering tariffs on imports and exports. In a related paper, Fiorini and Sanfilippo (2019) find that road access via RSDP increases overall employment, reduces agricultural employment, and increases service sector (although not manufacturing) employment. Using the same manufacturing census data, Shiferaw et al. (2015) estimate the relationship between RSDP road investments and firm performance, finding that road quality is linked to firm entry. Moneke (2019) studies the effects of roads and electricity and finds that roads alone had smaller welfare effects compared to roads combined with electrification. He uses an “inconsequential units” identification strategy based on colonial-era straight-line road plans, using units that were not directly of interest for the colonizer to identify the impact of the program. Relying on land use and economic activity as outcome variables, we similarly find notable spatial heterogeneity in outcomes. Adamopoulos (2018) studies the impact of RSDP on agricultural productivity in Ethiopia, using a panel from 1996-2014 at the medium administrative level (Woreda) and estimated travel times to agricultural markets.

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