In policy circles domestic transport infrastructure is seen as a key determinant of exports. Exports, in turn, are assumed to lead to job creation. More precisely, among policymakers, there is a well rooted idea according to which improved infrastructure can generate employment through facilitating increased exports. Statements in official documents introducing public export development programs of several countries around the world are illustrative in this regard. The document presenting the United States National Export Initiative 2011 is a clear example. There, it can be read “American businesses cannot participate in the global economy if they cannot get their products out the door…Deficiencies throughout America’s transportation system…severely impact the ability of businesses to transport their goods to global markets…Now more than ever, America’s ability to support additional jobs here at home depends on the ability to export goods and services to the world.” Of course, this argumentative line is not exclusive of developed countries. For instance, the Peruvian Plan Estratégico Nacional Exportador (National Strategic Export Plan) 2003-2013 states “The exporting sector…is one of the most affected by the infrastructure deficit, generally in transportation, which generates competitiveness losses relative to competing countries…In a context of increasing economic globalization, the exporting sector plays a fundamental role as a growth engine, in generating employment, and in fostering the development of nations…”.
Anecdotal evidence suggests that such a link may exist between transport infrastructure, exports, and employment. This is the case, for example, with the experience of Agroindustrial Santa Lucía S.A in Peru, the country we will focus on in this paper. This company created in 1994 is located in Tocache (Department of San Martín) and primarily produces and exports palm hearts to France through the customs in Callao (see Figure 1). As a result of the new roads built over the last decade, the distance that its shipments must be transported along to this customs declined. Interestingly, this firm’s exports and employment increased by 479% and 93.3% over this period, respectively.1 This kind of anecdotal evidence is often used by practitioners to justify investment in infrastructure.
Yet, these correlations, although suggestive, are not informative of causality. The reason is that there are potential endogeneity problems affecting both the relationship between internal infrastructure and exporting and that between exporting and employment. Thus, road improvements might be thought to favor better export performance of regions receiving infrastructure investments, but is also equally