Impact of infrastructure development on coal industry of Russia

In the beginning of 21 century Russia experienced an investment hike provoked by high oil prices in international markets. The increased investment resulted in a significant expansion of the road and railroad network across the country. In this paper, I exploit this expansion as a natural experiment. By doing so, I provide the first causal evidence of how better access to roads and railroads effects the production capacity of mines in the coal sector. To do that, I spatially and over time link production level data on the mine level for the period of 2000-2013 to self-collected information on 14 major road and railroad projects. This allows me to conduct a difference-in-differences analysis using the improved access to the transportation network as a treatment. My results suggest that being treated by having access to a better road within 10 km radius leads on average to a 100% increase in production within the next 3 years. Finally, it is important to note that my results are robust to variety of alternative specifications.