Long-term Implications of Highway Quality and Length in the Growth of Indian Manufacturing Sector: A System Dynamics Analysis

Abstract

India, with five million kilometers of length, has the world’s second largest road-network which is also the densest among the countries of similar size. Highways in the road-network play an important role in the development of a country’s economy. However, the highways in India are capacity constrained, slow, less safe, environmentally unfriendly, not maintained or non-maintainable and patchily administered. For the nation’s economic growth, the quality of roads and the length of its new-construction which facilitate the movement of tones of goods and market accessibility is a necessity. Improvement in transportation efficiency brings down the logistics cost, making the product more cost-competitive thereby encouraging economies-of-scale, which in turn provides the impetus to manufacturing growth. To understand the long-term implications of the quality of highways, the length of its new-construction and its related factors on the nation’s manufacturing growth, a System Dynamics approach has been used in the paper. The eight scenarios simulated in the model are expected to provide useful insights to the road-transport planners and the policy makers of the nation.