Development Impacts of Rural Road Improvement Projects in Bangladesh

The central issue of this thesis is to assess the farm level impacts of rural road improvement projects in Bangladesh. In 1995 CARE International in Bangladesh initiated a household survey implemented under the Food For Work program. This study analyzes the agricultural data from a survey covering 1400 households over a period of three years to study the impact of their road improvements. A system of four-commodity supply functions and three input demand functions are estimated using a two-step procedure. To examine the effect of road improvement, transport cost is embedded in effective price of agricultural commodities and inputs in each equation. The results provide a picture of the positive impact of road improvement on agriculture in Bangladesh. The use of agricultural inputs and resulting outputs goes up as the transport cost goes down because of road improvement. The effect of transport cost on perishable cash crops like potatoes, vegetables and fruit is greater than that of main food crops of rice and wheat. The magnitude of the impact of road improvement on agriculture per
household is small as one might expect, because the transport cost is only a small fraction of the product price. However, this small change in production, if aggregated over large number of households a single road serves, might become large.

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