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Paving the road to export: the trade impacts of domestic transport costs and road quality

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  • Blyde, Juan

Abstract

The literature examining the effects of domestic transport costs on trade flows is scarce. The few studies available rely mostly on distance-based measures as proxies of transport costs which impede analyzing the trade impacts of transport-infrastructure improvements, a critical aspect in regional and public policy. Applying a novel methodology that combines real freight costs and Geographic Information System (GIS) analysis to the case of Colombia, this paper measures the extent to which domestic transport costs -from the place of production to the port of shipment- act as a friction to international trade. Domestic transport costs are found to significantly affect the prospects of exporting. For instance, regions within the country with transport costs in the 25th percentile export around 2.3 times more than regions with transport costs in the 75th percentile, once other factors are controlled for. Export increases from road improvements are found to be larger in regions with initially higher transport costs. This is because regions with initially higher transport costs are normally associated with longer routes and those tend to have larger shares of roads in poor conditions

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24625.

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Date of creation: 25 Aug 2010
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Handle: RePEc:pra:mprapa:24625

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Keywords: Transport costs; road quality; regional exports;

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  1. Venables, Anthony J., 1993. "Equilibrium Locations of Vertically Linked Industries," CEPR Discussion Papers 802, C.E.P.R. Discussion Papers.
  2. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November.
  3. Clark, Ximena & Dollar, David & Micco, Alejandro, 2004. "Port efficiency, maritime transport costs, and bilateral trade," Journal of Development Economics, Elsevier, vol. 75(2), pages 417-450, December.
  4. Pierre-Philippe Combes & Miren Lafourcade, 2005. "Transport costs: measures, determinants, and regional policy implications for France," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 319-349, June.
  5. Marianne Matthee & Wim Naudé, 2008. "The Determinants of Regional Manufactured Exports from a Developing Country," International Regional Science Review, , vol. 31(4), pages 343-358, October.
  6. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "learning-by-exporting" important? Micro-dynamic evidence from Colombia, Mexico and Morocco," Finance and Economics Discussion Series 96-30, Board of Governors of the Federal Reserve System (U.S.).
  7. Miren Lafourcade & Elisenda Paluzie, 2008. "European integration, FDI and the geography of French trade," PSE Working Papers halshs-00586834, HAL.
  8. Hummels, David, 1999. "Toward a Geography of Trade Costs," GTAP Working Papers 1162, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  9. repec:fth:iniesr:430 is not listed on IDEAS
  10. repec:pse:psecon:2008-13 is not listed on IDEAS
  11. Roberto Alvarez & Ricardo López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1384-1400, November.
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