Abstract:
The Philippines demonstrates a puzzling disconnect between economic growth and distributional outcomes as decades of expansion have failed to deliver significant changes in poverty and income inequality. A frequently discussed strategy for inclusive growth is strategic investment in infrastructure, particularly in lagging regions. To augment limited literature on this topic, this study examines whether transport infrastructure investment can reduce income inequality by exploiting the staggered implementation of the nautical highways included in the Roll-on/Roll-off (RoRo) Terminal System that started in 2003. The staggered adoption design allows us to examine dynamic treatment effects and determine whether impacts vary with exposure duration and distance from infrastructure. Using a difference-in-differences approach, we assess how infrastructure affects the local income and inequalities, by comparing outcomes between port municipalities that joined the RoRo network and those that remained conventional ports over the period 2000 to 2020. We examine within-municipality inequality through Gini coefficients calculated from asset indices using Census data. Our analysis further extends to neighboring municipalities to capture possible externalities. Overall, our findings provide critical empirical evidence on infrastructure's distributional effects in developing, and archipelagic economies.
