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Infrastructure, Geographical Disadvantage, Transport Costs, and Trade

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  • Nuno Limão
  • Anthony J. Venables

Abstract

The authors use different data sets to investigate the dependence of transport costs on geography and infrastructure. Infrastructure is an important determinant of transport costs, especially for landlocked countries. Analysis of bilateral trade data confirms the importance of infrastructure and gives an estimate of the elasticity of trade flows with respect to the trade cost factor of around -3. A deterioration of infrastructure from the median to the 75th percentile raises transport costs by 12 percentage points and reduces trade volumes by 28 percent. Analysis of African trade flows indicates that their relatively low level is largely due to poor infrastructure.

Suggested Citation

  • Nuno Limão & Anthony J. Venables, 2001. "Infrastructure, Geographical Disadvantage, Transport Costs, and Trade," The World Bank Economic Review, World Bank, vol. 15(3), pages 451-45-479.
    • Handle: RePEc:oup:wbecrv:2001:15:3:451--479
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    Cited by:

    1. Madsen, Jakob B. & Robertson, Peter E. & Ye, Longfeng, 2024. "Lives versus livelihoods in the middle ages: The impact of the plague on trade over 400 years," European Economic Review, Elsevier, vol. 162(C).
    2. Dennis Novy, 2013. "Gravity Redux: Measuring International Trade Costs With Panel Data," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 101-121, January.
    3. Dominik Boddin & Frank Stähler, 2024. "Import tariffs and transport prices," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(2), pages 430-458, May.
    4. Kai A. Konrad, 2023. "The Geoeconomics of Trade Infrastructure and the Innovation Competition between China and the US," Working Papers tax-mpg-rps-2023-14, Max Planck Institute for Tax Law and Public Finance.
    5. Verma, Priyam, 2024. "Optimal Infrastructure after Trade Reform in India," Journal of Development Economics, Elsevier, vol. 166(C).

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