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Despite relative richness of the existing literature, it remains a challenge to consistently estimate the impacts of transport connectivity on agricultural production. The paper constructs pseudo-panel data with transport infrastructure defined at high resolution in two periods of time and examines spatially heterogeneous impacts of improved transport connectivity. The paper takes advantage of the unique circumstances in Mozambique where the Government invested intensively in road infrastructure during a relatively short period of time in the 2010s. Combining the highly disaggregated location-specific fixed effects with the instrumental variable method, the paper controls for the endogeneity to show that the improved road connectivity increased agricultural production significantly. Rural connectivity and domestic market accessibility are found to be of particular importance, but substantial heterogeneity exists across regions. The northern provinces, where transport connectivity is limited, have the potential for agricultural growth, exhibiting increasing returns to scale.

Agriculture Production and Transport Connectivity: Evidence from Mozambique