Infrastructure, geographical disadvantage, transport costs, and trade

Nuno Limão, Anthony J. Venables

Research output: Contribution to journalArticleResearchpeer-review

764 Citations (Scopus)

Abstract

The authors use different data sets to investigate the dependence of transport costs on geography and infrastructure. Infrastructure is an important determinant of transport costs, especially for landlocked countries. Analysis of bilateral trade data confirms the importance of infrastructure and gives an estimate of the elasticity of trade flows with respect to the trade cost factor of around -3. A deterioration of infrastructure from the median to the 75th percentile raises transport costs by 12 percentage points and reduces trade volumes by 28 percent. Analysis of African trade flows indicates that their relatively low level is largely due to poor infrastructure.

Original languageEnglish
Pages (from-to)451-479
Number of pages29
JournalWorld Bank Economic Review
Volume15
Issue number3
DOIs
Publication statusPublished - 2001
Externally publishedYes

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