Have transport costs contributed to the relative decline of sub-Saharan African exports? Some preliminary empirical evidence
From the mid-1950s to 1990, sub-Saharan Africa's share of global exports fell from 3.1 to under 1.2 percent, a decline that implies associated export earning losses of about $65 billion annually. Previous studies show that foreign trade barriers do not account for this poor performance. Indeed, African exports enjoy OECD tariff preferences. In the sub-Saharan African countries, too high a proportion of foreign exchange earnings is paying for Africa's high export transport costs. The authors demonstrate that relatively high transportation costs - especially for processed products - often place African exporters at a serious competitive disadvantage. African countries must use a far larger share of their foreign exchange earnings to pay for international transport services than other developing countries do - and the relative importance of those payments has been increasing. Why are Africa's transport costs so high? Ill-advised policies on the part of some African governments seem to have played a role, as their cargo reservation policies produced high"rents"for lines that have been shielded from the effects of competition. The failure to maintain or improve port and transport infrastructure has also played a role.
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- Bela Balassa, 1965. "Tariff Protection in Industrial Countries: An Evaluation," Journal of Political Economy, University of Chicago Press, vol. 73, pages 573-573.
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