Building Bridges: The Effect of Major Infrastructure Development on Trade

Arbeitspapier

We provide evidence of a positive effect of major infrastructure development on international trade, using the opening of the fixed link between Denmark and Sweden in 2000 (The Oresund Bridge) as a quasi-natural experiment. Our Synthetic Control Method (SCM) constructs a counterfactual Danish-Swedish trade relationship, which represents bilateral trade in the absence of the bridge. Evaluating actual trade against its synthetic counterpart for the period 2001-2008 shows that Danish-Swedish trade was 24.6% larger than it would have been in the absence of the bridge using our preferred specification. The result is robust to standard sensitivity checks. We supplement our analysis with a standard Difference-in-differences (DiD) estimator, which uses fixed effects. The DiD estimator yields a slightly larger trade effect of 26.7%, and is robust to a number of sensitivity analyses, including estimation at the product level. Both our SCM and DiD point to the trade-boosting effects being gradual.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2022:3

Classification and Topics

• Classification: Wirtschaft ; Empirical Studies of Trade ; Economic Integration
• Subject: Fixed link ; bridge ; tunnel ; transport infrastructure ; trade ; Synthetic Control Method ; Difference-in-differences

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Persson, Maria ; Soegaard, Christian ; Welander Tärneberg, Anna
• Event: Veröffentlichung
• (who): Lund University, School of Economics and Management, Department of Economics
• (where): Lund
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/260342
• Last update: 10.03.2025, 11:45 AM CET