Transport and economic growth: the case of ProAcesso in Minas Gerais

Abstract

The state of Minas Gerais has launched the ProAcesso program in order to expand the accessibility for 225 municipalities by means of paving rural roads. The relation between transport and economic growth has been largely investigated in the literature, but the empirical findings have proven to be controversial. This work is aimed at evaluating the impact of ProAcesso on economic growth in Minas Gerais. The findings indicate that ProAcesso did not contribute to economic growth. In line with “two way road argument”, this is because the positive and negative externalities promoted by the access to the transport network are canceled out.