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One Model fits all? Determinants of Transport Costs across Sectors and Country Groups

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  • Hannah Schürenberg-Frosch
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    Abstract

    We show with the aid of pooled OLS estimations that investments in improved road infrastructure have the potential to signicantly reduce transport costs. However, this result can only be clearly conrmed for industrial countries and is of primary importance for production and transportation of agricultural goods. For developing and transition countries we find other determinants such as weather conditions to be more important in determining transport costs. A key variable, especially in these countries, is corruption. At very high levels corruption has the potential to prevent positive effects from roads on transport costs or to even reverse them. This paper contributes to the literature on infrastructure investment by introducing and applying an internationally comparable measure of transport costs which can be calculated for a large and growing number of countries. We isolate important determinants of transport costs and provide insights into international and sectoral differences concerning the impact of roads on transport costs. We conclude that investment in transport infrastructure can have substantial positive effects especially on agricultural production and the ecient marketing of agricultural products but only if specic conditions are in place.

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    Bibliographic Info

    Paper provided by cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany). in its series cege – Center for European, Governance and Economic Development Research Discussion Papers with number 122.

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    Length: 34 pages
    Date of creation: 26 Apr 2011
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    Handle: RePEc:got:cegedp:122

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    Web page: http://www.cege.uni-goettingen.de
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    Keywords: Infrastructure; Transport networks; Transport costs; Agriculture; public investment; development;

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    References

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    1. Javier Escobal & Carmen Ponce, 2003. "The benefits of rural roads. Enhancing income opportunities for the rural poor," Documentos de Trabajo dt40b, Grupo de Análisis para el Desarrollo (GRADE).
    2. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    3. Jenks, Leland H., 1944. "Railroads as an Economic Force in American Development," The Journal of Economic History, Cambridge University Press, vol. 4(01), pages 1-20, May.
    4. Charles R. Hulten, 1996. "Infrastructure Capital and Economic Growth: How Well You Use It May Be More Important Than How Much You Have," NBER Working Papers 5847, National Bureau of Economic Research, Inc.
    5. Fan, Shenggen, 2008. "Public expenditures, growth, and poverty in developing countries: Lessons from developing countries," Issue briefs 51, International Food Policy Research Institute (IFPRI).
    6. Antonio Estache, 2007. "Infrastructure and Development: A survey of Recent and Upcoming Issues," ULB Institutional Repository 2013/44060, ULB -- Universite Libre de Bruxelles.
    7. Fremdling, Rainer, 1977. "Railroads and German Economic Growth: A Leading Sector Analysis with a Comparison to the United States and Great Britain," The Journal of Economic History, Cambridge University Press, vol. 37(03), pages 583-604, September.
    8. Ram, Rati, 1996. "Productivity of public and private investment in developing countries: A broad international perspective," World Development, Elsevier, vol. 24(8), pages 1373-1378, August.
    9. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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