SMU SOE Seminar Series (April 25, 2025): Checkpoints and Local Economic Development

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ABSTRACT

We examine the impact of a 2017 reform in India that eliminated interstate checkpoints. The reform generated a significant reduction in administrative burdens that previously forced trucks to stop for extended periods of time at checkpoints. First, we document that prior to the reform, these checkpoints generated agglomeration effects, with local economies sustained by demand created by these truck drivers. We show that this effect is consistent across a multitude of outcomes measuring economic activity, such as nightlights, settlement build-up from satellite images, and number of rms. Using these outcomes, we also show that the exogenous reduction of idle trucks as a consequence of the reform, resulted in lower economic activity in villages close to the checkpoints, and that these effects are partially driven by the types of rms that existed in these areas.

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