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Determinants of transport costs: Are they uniform across countries?

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  • Schürenberg-Frosch, Hannah

Abstract

The author shows with pooled OLS estimations based on transport margins from international social accounting data that investments in improved road infrastructure have the potential to significantly reduce transport costs. However, this result can only be clearly confirmed for industrial countries and is of primary importance for production and transportation of agricultural goods. For developing and transition countries, in contrast, the author finds other determinants such as weather conditions to be more important in determining transport costs. A key variable, especially in these countries, is corruption. Very high corruption has the potential to prevent positive effects from road infrastructure 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. The author concludes that investments in transport infrastructure can have substantial positive effects especially on agricultural production and the efficient marketing of agricultural products but only if specific additional conditions are given. --

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2012-54.

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Date of creation: 2012
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Handle: RePEc:zbw:ifwedp:201254

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Keywords: infrastructure; transport networks; transport costs; agriculture; public investment; development;

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  1. Naude, Wim & Matthee, Marianne, 2007. "The Significance of Transport Costs in Africa," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Canning, David & Bennathan, Esra, 2000. "The social rate of return on infrastructure investments," Policy Research Working Paper Series 2390, The World Bank.
  3. 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, Cambridge University Press, vol. 37(03), pages 583-604, September.
  4. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda, Federal Reserve Bank of Chicago 88-7, Federal Reserve Bank of Chicago.
  5. Jenks, Leland H., 1944. "Railroads as an Economic Force in American Development," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 4(01), pages 1-20, May.
  6. Javier Escobal & Carmen Ponce, 2003. "The benefits of rural roads. Enhancing income opportunities for the rural poor," Documentos de Investigación, Grupo de Análisis para el Desarrollo (GRADE) dt40b, Grupo de Análisis para el Desarrollo (GRADE).
  7. Ram, Rati, 1996. "Productivity of public and private investment in developing countries: A broad international perspective," World Development, Elsevier, Elsevier, vol. 24(8), pages 1373-1378, August.
  8. Shenggen Fan & Peter Hazell & Sukhadeo Thorat, 2000. "Government Spending, Growth and Poverty in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 82(4), pages 1038-1051.
  9. Fay, Marianne & Yepes, Tito, 2003. "Investing in infrastructure : what is needed from 2000 to 2010?," Policy Research Working Paper Series 3102, The World Bank.
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