Evaluating the impacts of HSR stations on the creation of firms

Justified on territorial equity criteria, Spain has developed one of the largest high-speed rail (HSR) network in the world. This research evaluates how the opening of a new station affects the number of firms created at provincial level. We estimate differential impacts on firm creation across four different types of activities: service, tourism, knowledge intensive and manufacturing. The use of panel data makes it possible both to test for the dynamic structure in the data and to provide new insights on the territorial impact of HSR effects. Moreover, we develop a methodological procedure to improve the accuracy of small but positive effects. The results point out that being connected to a HSR network may promote firm creation, but this is not always the case. It has a larger effect in the service, tourism and knowledge intensive activities, whereas in the manufacturing sector the impact is almost null. Regarding the territorial impact, we find that the HSR can reinforce the concentration of firm creation in the biggest cities. Additionally, improving short-distance connections can strengthen agglomeration benefits by enlarging metropolitan areas. Finally, HSR would contribute to increasing the level of divergence in terms of firm creation across provinces. Therefore, our work calls for a rethinking of the strategy of basing investment decisions on territorial equity criteria.