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Domestic road infrastructure and international trade: Evidence from Turkey

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  • Coşar, A. Kerem
  • Demir, Banu

Abstract

Drawing on the large-scale public investment in roads undertaken in Turkey during the 2000s, this paper contributes to our understanding of how internal transportation infrastructure affects regional access to international markets. Using data on international trade of Turkish provinces and the change in the capacity of the roads connecting them to the international gateways of the country, we estimate the distance elasticity of trade associated with roads of varying capacity. Three key results emerge. First, the cost of an average shipment over a high-capacity expressway is about 70% lower than it is over single-lane roads. Second, the present value of a 10-year stream of trade flows generated by a one-dollar investment in road infrastructure ranges between $0.7 and $2. Third, the reduction in transportation costs is greater the more transportation-sensitive an industry is. To the extent that efficient logistics enable countries to take part in global supply chains and exploit their comparative advantages, our findings have important developmental implications.

Suggested Citation

  • Coşar, A. Kerem & Demir, Banu, 2016. "Domestic road infrastructure and international trade: Evidence from Turkey," Journal of Development Economics, Elsevier, vol. 118(C), pages 232-244.
  • Handle: RePEc:eee:deveco:v:118:y:2016:i:c:p:232-244
    DOI: 10.1016/j.jdeveco.2015.10.001
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    1. repec:eee:wdevel:v:96:y:2017:i:c:p:198-215 is not listed on IDEAS
    2. Heid, Benedikt & Larch, Mario & Yotov, Yoto, 2017. "Estimating the Effects of Non-discriminatory Trade Policies within Structural Gravity Models," School of Economics Working Paper Series 2017-10, LeBow College of Business, Drexel University.
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    4. Xu, Hangtian, 2016. "Domestic railroad infrastructure and exports: Evidence from the Silk Route," China Economic Review, Elsevier, vol. 41(C), pages 129-147.
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    6. World Bank, 2016. "Georgia Economic Impact of East-West Highway Phase 2," World Bank Other Operational Studies 24668, The World Bank.
    7. Cosar, Kerem & Pakel, Banu Demir, 2017. "Shipping inside the Box: Containerization and Trade," CEPR Discussion Papers 11750, C.E.P.R. Discussion Papers.
    8. César Salazar & Sam Jones, 2017. "The impact of infrastructure shocks on agricultural markets: Evidence from the Zambezi river in Mozambique," WIDER Working Paper Series 191, World Institute for Development Economic Research (UNU-WIDER).
    9. Pablo Fajgelbaum & Stephen J. Redding, 2014. "External Integration, Structural Transformation and Economic Development: Evidence from Argentina 1870-1914," NBER Working Papers 20217, National Bureau of Economic Research, Inc.
    10. Tarasov, Alexander & Felbermayr, Gabriel, 2014. "Trade and the Spatial Distribution of Transport Infrastructure," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100511, Verein für Socialpolitik / German Economic Association.
    11. repec:eee:transa:v:107:y:2018:i:c:p:126-139 is not listed on IDEAS
    12. repec:eee:retrec:v:61:y:2017:i:c:p:2-14 is not listed on IDEAS
    13. Christian K. Darko & Giovanni Occhiali & Enrico Vanino, 2018. "The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa," Working Papers 2018.14, Fondazione Eni Enrico Mattei.
    14. Pablo D. Fajgelbaum & Edouard Schaal, 2017. "Optimal Transport Networks in Spatial Equilibrium," NBER Working Papers 23200, National Bureau of Economic Research, Inc.
    15. Gojko Barjamovic & Thomas Chaney & Kerem A. Coşar & Ali Hortaçsu, 2017. "Trade, Merchants, and the Lost Cities of the Bronze Age," NBER Working Papers 23992, National Bureau of Economic Research, Inc.
    16. Arnarson, Björn Thor, 2015. "Bridging Trade Barriers: Evaluating Models of Multi-Product Exporters," Working Papers 2015:6, Lund University, Department of Economics, revised 14 Oct 2016.
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    18. Hallonsten, Jan Simon & Ziesemer, Thomas, 2016. "A semi-endogenous growth model for developing countries with public factors, imported capital goods, and limited export demand," MERIT Working Papers 004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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    More about this item

    Keywords

    International trade; Market access; Transportation infrastructure; Time-sensitive industries;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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