Access to land is a major constraint for manufacturing expansion in developing countries, particularly as production expands into peri-urban and rural areas. Small agricultural holdings raise firms' land assembly costs by requiring negotiations with more landowners for a given area. This paper studies how agricultural land fragmentation shapes manufacturing expansion, structural change, and welfare. Exploiting district-level variation in exposure to an inheritance reform in India that increased land division, I show that fragmentation shifts employment from manufacturing to agriculture and reduces manufacturing activity, particularly in land-intensive industries. Microdata reveals two mechanisms: fragmentation raises firms’ land acquisition costs, while smaller farms generate higher profits per acre. A two-sector general equilibrium model capturing these mechanisms shows that districts with larger fragmentation experience larger gains in total real income, despite slower structural change. These gains, however, have uneven effects as workers lose from larger wage declines while landowners benefit from larger rent gains. A counterfactual eliminating firms’ land assembly frictions substantially reduces the wage declines, suggesting that easing land access can mitigate costs to workers even when agricultural land fragmentation persists.

We study how poor domestic transport infrastructure shapes the distributional effects of integration with world markets. Exploiting India’s large-scale trade liberalization in the 1990s, together with a digitized road network, we find that reductions in input tariffs generate substantially larger manufacturing gains in districts with better access to international ports, accompanied by faster reallocation of workers out of agriculture and into manufacturing and producer services, and greater migration from more remote regions. We interpret these findings through a quantitative spatial model. A key mechanism is that manufacturing intermediates are more time-sensitive in transit than manufacturing output, leading to larger increases in the relative returns to manufacturing in districts with better port access. The model replicates our main empirical findings and reveals stark distributional inequalities from liberalization, with gains in real income, real wages, and real rents heavily skewed toward regions with better port access. Finally, a simultaneous highway expansion targeted at improving port connectivity eliminates these spatial inequalities in welfare gains while generating net aggregate benefits.

We examine the role of transportation and communication infrastructure in shaping structural transformation by embedding it in a spatial model of non-homothetic demand and multi-sector production. We show that service-led structural change can both be a cause of service productivity growth, or a consequence of improved connectivity that allows districts to source tradable goods from others; rising real incomes increase demand for (non-tradable) services, which have to be supplied locally. We quantify the importance of these channels using detailed data on road and cellular network expansion, an instrumental variables strategy, and representative household and establishment data in India. Infrastructure—particularly cellular networks—and sectoral productivity each account for about half the aggregate real-income gains between 1999–2009. While infrastructure-driven gains are lower in initially more urban areas, spatial complementarities through a national network expansion are larger in them. Put together, we conclude that infrastructure shapes both the sectoral and spatial incidence of structural transformation.