LAUSR

Abstract The literature on the New Economic Geography (NEG) suggests that transport cost is a major driving factor for the emergence of core–periphery patterns within a country. However, very few studies have tested this theoretical explanation in the context of transport infrastructure networks in developing countries. This paper takes a closer look at Nepal and tests four expectations that are drawn from the NEG, which highlight different aspects of the formation of core–periphery dynamic as determined by infrastructure quality. The expectations are tested by relating spatial-temporal patterns of road development to the growth and distribution of cities and examining the transport infrastructure contribution to shaping the patterns of regional economic development. We used intercity travel time estimates, based on the design speed of roads, length of sections and pavement type (from 1961 onwards in 10-year segments) as an indicator for the quality of infrastructure (transportation cost). Next, we computed hubness and accessibility indices of cities, defined by means of a gravity model and as a function of transportation cost, to undertake a cross-city comparison. We applied GIS mapping, multiple regression and mediation analysis techniques to relate these transport and accessibility characteristics to spatio-temporal patterns in city size and GDP per capita. Our study broadly confirms the core expectation derived from the NEG that transport improvements facilitate urbanization and that higher urbanization leads to higher regional GDP per capita. Two independent effects were identified in qualification of these overall patterns – the impact of market potential on city primacy and the impact of highly localized, immobile resources on GDP.