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From Mine to Coast: Transport Infrastructure and the Direction of Trade in Developing Countries

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  • Roberto Bonfatti
  • Steven Poelhekke

Abstract

Mine-related transport infrastructure specializes in connecting mines to the coast, and not so much to neighboring countries. This is most clearly seen in developing countries, whose transport infrastructure was originally designed to facilitate the export of natural resources in colonial times. We provide first econometric evidence that mine-to-coast transport infrastructure matters for the pattern of trade of developing countries, and can help explaining their low level of regional integration. The main idea is that, to the extent that it can be used not just to export natural resources but also to trade other commodities, this infrastructure may bias a country's structure of transport costs in favor of overseas trade, and to the detriment of regional trade. We investigate this potential bias in the context of a gravity model of trade. Our main findings are that coastal countries with more mines import less than average from their neighbors and this effect is stronger when the mines are located in such a way that the related infrastructure has a stronger potential to affect trade costs. Consistently with the idea that this effect is due to mine-to-coast infrastructure, landlocked countries with more mines import less than average from their non-transit neighbors, but more then average from their transit neighbors. Furthermore, this effect is specific to mines and not to oil and gas fields, arguably because pipelines cannot possibly be used to trade other commodities. We discuss the potential welfare implications of our results, and relate these to the debate on the economic legacy of colonialism for developing countries.

Suggested Citation

  • Roberto Bonfatti & Steven Poelhekke, 2013. "From Mine to Coast: Transport Infrastructure and the Direction of Trade in Developing Countries," Discussion Papers 2013-03, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:13/03
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    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.
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    3. 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.
    4. 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).
    5. 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.
    6. Richard Bluhm & Melanie Krause, 2018. "Top Lights - Bright Cities and their Contribution to Economic Development," CESifo Working Paper Series 7411, CESifo.
    7. 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.
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    13. Christian Duben & Melanie Krause, 2019. "Population, light, and the size distribution of cities," Working Papers 488, ECINEQ, Society for the Study of Economic Inequality.
    14. Ralph de Haas & Steven Poelhekke, 2016. "Mining Matters: Natural Resource Extraction and Local Business Constraints," CESifo Working Paper Series 6198, CESifo.
    15. Amarasinghe, Ashani & Hodler, Roland & Raschky, Paul A. & Zenou, Yves, 2018. "Spatial Diffusion of Economic Shocks in Networks," CEPR Discussion Papers 12854, C.E.P.R. Discussion Papers.
    16. 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.
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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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