Roads and Trade in Colombia

I estimate the effect of major roads within and between cities on the level and composition of trade for Colombian cities. I confirm that road distance between cities is a major impediment to trade. In addition, major roads within cities have a large effect on a city׳s exports and imports with an elasticity of approximately 0.20 estimated with ols and up to 0.50 with iv. If anything, the effects are stronger for the value than for the weight of exports. I interpret these results as city roads shifting economic activity in cities towards the production of tradable and somewhat lighter goods.