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From mine to coast: Transport infrastructure and the direction of trade in developing countries

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  • Bonfatti, Roberto
  • Poelhekke, Steven

Abstract

Mine-related transport infrastructure typically connects mines directly to the coast, a pattern that is most clearly seen in Africa. We estimate the effect of such infrastructure on the pattern of bilateral trade flows. We find that a standard deviation increase in the number of mines over the mean biases a country's pattern of trade flows in favor of overseas trade, to the extent that these mining countries import 56% less from neighboring countries (relative to overseas countries), than do countries with an average number of mines. However, this effect is reversed for mining landlocked countries, who import relatively more from neighbors. We rationalize this finding through the unequal effect that mines have on a country's network of infrastructure: because the mine-related transport infrastructure connects the coast rather than neighboring countries, it lowers the cost of trading with overseas countries more than with neighbors. In contrast, for landlocked countries trade costs are also lowered with some neighbors through which infrastructure is built to reach the coast. The effect is specific to mines and not to oil and gas fields, because pipelines cannot be used to trade other commodities. The effect is robust to measuring the stock of mine-related infrastructure by distance along roads between mines and ports, and to taking into account their relative position to routes used for trade between ports and main cities. We discuss the welfare implications of our results for development, and relate these to the recent surge of Chinese infrastructure investment in Africa.

Suggested Citation

  • Bonfatti, Roberto & Poelhekke, Steven, 2017. "From mine to coast: Transport infrastructure and the direction of trade in developing countries," Journal of Development Economics, Elsevier, vol. 127(C), pages 91-108.
  • Handle: RePEc:eee:deveco:v:127:y:2017:i:c:p:91-108
    DOI: 10.1016/j.jdeveco.2017.03.004
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    Cited by:

    1. Richard Bluhm & Axel Dreher & Andreas Fuchs & Bradley C. Parks & Austin M. Strange & Michael J. Tierney, 2020. "Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries," CESifo Working Paper Series 8344, CESifo.
    2. De Haas, Ralph & Poelhekke, Steven, 2019. "Mining matters: Natural resource extraction and firm-level constraints," Journal of International Economics, Elsevier, vol. 117(C), pages 109-124.
    3. Bazillier, Remi & Girard, Victoire, 2020. "The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso," Journal of Development Economics, Elsevier, vol. 143(C).
    4. Qipeng Sun & Xiu Wang & Fei Ma & Yanhu Han & Qianqian Cheng, 2019. "Synergetic Effect and Spatial-Temporal Evolution of Railway Transportation in Sustainable Development of Trade: An Empirical Study Based on the Belt and Road," Sustainability, MDPI, Open Access Journal, vol. 11(6), pages 1-22, March.
    5. Richard Bluhm & Melanie Krause, 2018. "Top Lights - Bright Cities and their Contribution to Economic Development," CESifo Working Paper Series 7411, CESifo.
    6. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    7. Wang, Cong & Yang, Hangjun & Yuan, Hang, 2018. "The impact of railway reform on corporate export: The case of China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 627-647.
    8. Olle Östensson, 2017. "Local content, supply chains, and shared infrastructure," WIDER Working Paper Series 096, World Institute for Development Economic Research (UNU-WIDER).
    9. Olle Östensson, 2017. "Local content, supply chains, and shared infrastructure," WIDER Working Paper Series wp-2017-96, World Institute for Development Economic Research (UNU-WIDER).
    10. Ralph de Haas & Steven Poelhekke, 2016. "Mining Matters: Natural Resource Extraction and Local Business Constraints," CESifo Working Paper Series 6198, CESifo.
    11. Roberto Bonfatti & Yuan Gu & Steven Poelhekk, 2019. "Priority roads: The political economy of Africa's interior-to-coast roads," Discussion Papers 2019-04, University of Nottingham, GEP.
    12. Bluhm, Richard & Krause, Melanie, 2018. "Top Lights: Bright cities and their contribution to economic development," MERIT Working Papers 2018-041, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    13. Jacques†François Thisse, 2018. "Human Capital and Agglomeration Economies in Urban Development," The Developing Economies, Institute of Developing Economies, vol. 56(2), pages 117-139, June.
    14. Ashani Amarasinghe & Roland Hodler & Paul A. Raschky & Yves Zenou, 2018. "Spatial Diffusion of Economic Shocks in Networks," CESifo Working Paper Series 7001, CESifo.
    15. Nemera Gebeyehu Mamo, 2018. "Essays on natural resources in Africa: local economic development, multi-ethnic coalitions and armed conflict," Economics PhD Theses 0518, Department of Economics, University of Sussex Business School.
    16. Hendrik KRUSE & Thais NUNEZ-ROCHA & Camélia TURCU, 2019. "Infrastructure aid for resource trade? The crossroads of strategy and sustainable development," LEO Working Papers / DR LEO 2728, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
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    More about this item

    Keywords

    Mineral resources; Transport infrastructure; Regional trade integration; Gravity model; Economic legacy of colonialism;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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