Asian Journal of Economics, Business and Accounting

Newly built national highways in Kerala were intended to catalyse regional economic development by reducing transport costs, improving market connectivity, and strengthening supply chains. However, recurrent structural failures and rapid asset degradation have substantially weakened these anticipated benefits and generated adverse socio-economic outcomes. This paper reconceptualizes newly constructed highways as Common-Property Resources and appliesOstrom’s polycentric governance framework to examine how institutional fragmentation, inadequate maintenance regimes, and weak accountability mechanisms transform infrastructure investments into economic liabilities. Employing a mixed-methods approach, the study integrates structured household surveys (n = 300), stakeholder interviews, and secondary administrative data. Quantitative analyses—including descriptive statistics, correlation matrices, multivariate regression models, and robustness checks—are complemented by qualitative thematic coding to trace the causal pathways linking highway failures to supply-chain disruptions, income volatility, health and insurance costs, environmental externalities, and disproportionate impacts on vulnerable groups.

Empirical results indicate a statistically significant negative association between age and reported highway disruption (β = −0.058, p = 0.047), which is more plausibly explained by demographic usage patterns and adaptive behaviour—such as reduced mobility intensity among older populations—rather than superior infrastructure performance. In contrast, income level shows no statistically significant relationship with disruption (p = 0.975), suggesting that economic status alone does not predict exposure to highway failures. Although age emerges as a relatively stronger predictor, the adjusted R² value of 0.347 indicates that substantial variation remains unexplained, underscoring the importance of omitted institutional, physical, and environmental determinants, including design quality, maintenance effectiveness, traffic density, and climatic stress.

Overall, the findings demonstrate that while highway infrastructure holds significant growth-enhancing potential, weak governance structures erode its developmental returns. The study advances actionable policy recommendations centered on decentralized monitoring, participatory maintenance mechanisms, strengthened accountability, and sustainable financing models to restore infrastructure performance and socio-economic benefits.