# **5.3.5 Spatial Impacts**

**Local complementary impacts of infrastructure** Table 8 describes how the simulated changes in non-agricultural employment correlates with local characteristics and the impact of infrastructure investments on accessibility and productivity. Controlling for initial characteristics of each region, the impact of improved market access is associated with a higher increase in non-agricultural jobs when complemented with investments in electrification. We look at the different impacts of road accessibility for the regions whose access to electrification is currently below 50% of the population in the baseline and the rest.<sup>18</sup> Columns (1) and (2) show that there is no difference on the impact of road accessibility when comparing the two types of regions before the electrification counterfactual. Improvement in market access through roads only is here not significantly associated with change in sectoral employment. Columns (3) and (4) show that the impact on non-agricultural jobs is only significant for the regions that had less than 50% access to electricity before the simulated bundle of investments in infrastructure. In line with the reduced-form results, bundled investments are associated with larger impacts on sectoral change. In appendix, Table A13 provides a similar analysis ons welfare showing that complementarity effects are less significant for local welfare change than for structural change.

Table 8: OLS results for change in non-agricultural employment for different scenarios

|||_Sce_|_narios_||
|---|---|---|---|---|
||Roads<br>(1)|Roads + borders<br>(2)|Roads + Elect.<br>(3)|All three<br>(4)|
|Population|−1_._928|0_._239|5_._027<sup>∗∗</sup>|4_._710<sup>∗∗∗</sup>|
||(1_._379)|(2_._130)|(2_._470)|(1_._570)|
|Wage|−4_._999|−13_._886<sup>∗∗∗</sup>|−2_._714|−8_._174<sup>∗∗</sup>|
||(3_._358)|(4_._706)|(5_._716)|(3_._300)|
|Employment in Agriculture|0_._001|−0_._080<sup>∗∗</sup>|0_._111<sup>∗∗</sup>|0_._034|
||(0_._026)|(0_._037)|(0_._046)|(0_._027)|
|Market Access (roads)*I(Electrifcation=1)|0_._004||0_._754<sup>∗∗∗</sup>||
||(0_._060)||(0_._116)||
|Market Access (roads)*I(Electrifcation=0)|−0_._100||0_._133||
||(0_._067)||(0_._116)||
|Market access (roads + borders) *I(Electrifcation=1)||0_._072<sup>∗∗</sup>||0_._175<sup>∗∗∗</sup>|
|||(0_._029)||(0_._023)|
|Market access (roads + borders) *I(Electrifcation=0)||0_._071<sup>∗∗</sup>||−0_._013|
|||(0_._031)||(0_._022)|
|Productivity shock|||−0_._739<sup>∗∗∗</sup>|−0_._753<sup>∗∗∗</sup>|
||||(0_._099)|(0_._059)|
|Constant|4_._314<sup>∗</sup>|9_._630<sup>∗∗∗</sup>|2_._809|9_._567<sup>∗∗∗</sup>|
||(2_._327)|(3_._244)|(3_._953)|(2_._268)|
|Observations|205|205|205|205|
|R<sup>2</sup><br>|0.035|0.077|0.277|0.483|
|Adjusted R<sup>2</sup>|0.011|0.054|0.255|0.467|

_Note:_ ∗p<0.1; ∗∗p<0.05; ∗∗∗p<0.01

**Overall Impacts** The impacts of infrastructure investments and their combinations differ across regions. Lower transport and trade costs increase market access, providing more opportunities for producers in districts that benefit from transport investments. Better connectivity

> 18The 50% threshold corresponds to the threshold used in the reduce-form estimation part.

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