Road to Productivity: The Effect of Roads on Manufacturing TFP in India Click here for the latest version Subham Kailthya * Uma Kambhampati † September 2018 Abstract In this article, we examine the impact of roads on manufacturing total factor productivity (TFP). High road density lowers transport cost, which boosts manufac- turing TFP. We exploit exogenous variation in the partisan alignment of states with the centre to identify impact. Using establishment-level panel data on Indian manu- facturing during 1998-2012, we find that road density raises TFP by 10%-34% at the industry-level. This translates to an average elasticity of 0.12. The impact of roads on TFP differs by firm’s size, age and location. Smaller firms, incumbents and those in urban states see most pronounced gains. Furthermore, long-differenced results show that an increase in road density raises the growth rate of TFP. Placebo tests on our instrument and several robustness checks reinforce our findings. Thus, ad- dressing the shortfall in transport infrastructure can unlock large economic dividend. Keywords: Manufacturing; Total Factor Productivity; Transport Infrastruc- ture; Roads; Political Economics; India JEL codes: D24; L60; R11; R40; D72 * Corresponding author, Department of Economics, University of Reading, Whiteknights. Email: subham01@gmail.com † Department of Economics, University of Reading 1