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Farther on Down the Road: Transport Costs, Trade and Urban Growth in sub-Saharan Africa

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  • Adam Storeygard

Abstract

How does isolation affect the economic activity of cities? Transport costs are widely considered an important barrier to local economic activity but their impact in developing countries is not well-studied. This paper investigates the role of inter-city transport costs in determining the income of sub-Saharan African cities. In particular, focusing on fifteen countries whose largest city is a port, I ask how important access to that city is for the income of hinterland cities. The lack of panel data on both local economic activity and transport costs has prevented rigorous empirical investigation of this question. I fill this gap with two new datasets. Satellite data on lights at nigh proxy for city economic activity, and new road network data allow me to calculate the shortest route between cities. Cost per unit distance is identified b plausibly exogenous world oil prices. The results show that an oil price increase of the magnitude experienced between 2002 and 2008 induces the income of cities near a major port to increase by 6.6 percent relative to otherwise identical cities one standard deviation farther away. Combined with external estimates, this implies an elasticity of city economic activity with respect to transport costs of -0.25 at that distance. Moreover, the effect differs by the surface of roads between cities. Cities connected to the port by paved roads are chiefly affected by transport costs to the port, while cities connected to the port by unpaved roads are more affected by connections to secondary centers.

Suggested Citation

  • Adam Storeygard, 2014. "Farther on Down the Road: Transport Costs, Trade and Urban Growth in sub-Saharan Africa," Discussion Papers Series, Department of Economics, Tufts University 0781, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0781
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    References listed on IDEAS

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    Cited by:

    1. Stephan Fretz & Raphaël Parchet & Frédéric Robert-Nicoud, 2017. "Highways, Market Access and Spatial Sorting," SERC Discussion Papers 0227, Spatial Economics Research Centre, LSE.
    2. repec:eee:jeeman:v:86:y:2017:i:c:p:210-228 is not listed on IDEAS
    3. David von Below & Pierre-Louis Vézina, 2016. "The Trade Consequences of Pricey Oil," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(2), pages 303-318, June.
    4. Okoye, Dozie & Pongou, Roland & Yokossi, Tite, 2017. "On the Dispensability of New Transportation Technologies: Evidence from the Heterogeneous Impact of Railroads in Nigeria," MPRA Paper 77293, University Library of Munich, Germany.
    5. repec:eee:retrec:v:61:y:2017:i:c:p:2-14 is not listed on IDEAS
    6. Joachim Vandercasteelen & Seneshaw Tamru & Bart Minten & Johan Swinnen, 2017. "Secondary towns, agricultural prices, and intensification: Evidence from Ethiopia," LICOS Discussion Papers 39317, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    7. Bernard Hoekman, 2017. "Trade in services: Opening markets to create opportunities," WIDER Working Paper Series 031, World Institute for Development Economic Research (UNU-WIDER).
    8. David von Below & Pierre-Louis Vézina, 2016. "The Trade Consequences of Pricey Oil," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(2), pages 303-318, June.

    More about this item

    Keywords

    Urbanization; Transport costs; Infrastructure; Roads; Sub-Saharan Africa;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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