HIGHWAYS AND GLOBALIZATION

This article quantifies the value of U.S. highways. We develop a multisector general equilibrium model with many locations in United States (i.e., counties) and countries. In model, producers choose shipping routes subject to domestic international trade costs, endogenous congestion, port efficiency at transshipment points. Applying we find that removing Interstate Highway System reduces real GDP by $421–$578 billion. The results highlight gains from intersectoral as well role transportation infrastructure shaping regional comparative advantage.