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Transportation Mode Choice and International Fragmentation of Production: Evidence from a Developing Country

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  • Hulya Saygili
  • Kemal Turkcan

Abstract

Developments in transportation technologies have facilitated and encouraged the international fragmentation of production by reducing transportation costs and ensuring that parts and components are delivered safely and timely within global production networks. The fact that the stages of the fragmented production processes have been placed in different distance and geographical locations created a demand for alternative modes of transportation. The objective of this study is to analyze the effects of fragmentation of production measured by parts and components trade on the choice of transportation mode including air, sea and road. By doing that, the paper attempts to account for the advantages/disadvantages of alternative transportation modes in short-medium-long distance trade. Using a detailed data set (HS-12 digit product level statistics for the 2000-2014 period and 188 countries) of Turkey�s machinery exports, we show that fragmentation of production plays a significant role in the selection of transportation mode. In particular, road transportation with good infrastructure is a significant trade facilitating mode of transportation to nearby trade partners, when trade involves P&C and light products.

Suggested Citation

  • Hulya Saygili & Kemal Turkcan, 2018. "Transportation Mode Choice and International Fragmentation of Production: Evidence from a Developing Country," Working Papers 1813, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1813
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2018/18-13
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    Keywords

    Mode of transportation; Fragmentation of production; Global production networks; International trade; Turkey;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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