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The Road Out of Poverty

According to a recent article in The Economist, global poverty is getting both rarer, and “harder to tackle.” Now, more than ever, we need to find innovative ways to enable economic development and to extend opportunity to the world’s worst off. Building and improving roads in rural areas is an underutilized innovation for ending poverty. Roads connect rural residents to the outside world. In doing so, they facilitate economic development in a multitude of ways.

 

First, they give rural residents access to markets, thereby enabling them both to sell their products for higher prices and to purchase factors (such as better fertilizer, seeds, or agricultural tech for farmers) that can enhance their production. In turn, rural residents can become wealthier and more productive.

 

Second, as roads make urban labor markets more accessible to rural residents, these residents will have the opportunity to take on better-paying “city” jobs—jobs that would have hitherto been unavailable to them.

 

Third, roads can bring in outside ideas that would not have otherwise reached rural villages, spreading knowledge and innovative thinking. Fourth, roads connect rural residents to hospitals and health clinics, thereby improving health outcomes. Reduced disease / better healthcare has been shown to boost economic development by improving productivity and cognition. Similarly, roads connect rural residents to schools, increasing education levels and human capital (an oft-pursued goal of poverty-reduction programs). 

 

While some studies have questioned whether investing heavily in roads is worth the significant costs, other analyses have found that targeted investments to improve feeder roads to underserved rural communities can reduce poverty rates in those communities by ~10%. One study found that each additional kilometer of such roads can reduce poverty by 0.4%. Case studies in countries ranging from India, to Ethiopia, to Mexico have borne out these findings, suggesting that the benefits of improved roads are near universal.

 

So, why is building roads still an underutilized development strategy? There are likely a host of reasons, including that the positive effects of building roads are not as intuitive as the positive effects of other interventions like improving education; that building roads is not as trendy as interventions like UBI; and, that having access to a road seems less fundamental than having access to clean water or malaria nets, for example. Building roads, like any infrastructure project, can also be quite expensive and can provide opportunities for corrupt officials to misuse public funds. Moreover, even when non-corrupt public officials decide to build roads, they all too often focus on building highways—a sexier, but less impactful strategy.

 

However, though it may not yet be the most popular pathway to development, the evidence undergirding this innovation for ending poverty is clear. Roads need not be paved (a major cost-saving strategy), so long as they are passable throughout the year. Given that over 80% of African roads are impassable during the rainy season, there is much work to be done. Roads equip impoverished people with the infrastructure they need to lift themselves out of poverty, promoting a virtuous cycle of sustainable economic development. They may literally offer a “road out of poverty.”

 

 

 

 

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