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Explaining high transport costs within Malawi - bad roads or lack of trucking competition ?

Author

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  • Lall, Somik V.
  • Wang, Hyoung
  • Munthali, Thomas

Abstract

What are the main determinants of transport costs: network access or competition among transport providers? The focus in the transport sector has often been on improving the coverage of"hard"infrastructure, whereas in reality the cost of transporting goods is quite sensitive to the extent of competition among transport providers and scale economies in the freight transport industry, creating monopolistic behavior and circular causation between lower transport costs and greater trade and traffic. This paper contributes to the discussion on transport costs in Malawi, providing fresh empirical evidence based on a specially commissioned survey of transport providers and spatial analysis of the country’s infrastructure network. The main finding is that both infrastructure quality and market structure of the trucking industry are important contributors to regional differences in transport costs. The quality of the trunk road network is not a major constraint but differences in the quality of feeder roads connecting villages to the main road network have significant bearing on transport costs. And costs due to poor feeder roads are exacerbated by low volumes of trade between rural locations and market centers. With empty backhauls and journeys covering small distances, only a few transport service providers enter the market, charging disproportionately high prices to cover fixed costs and maximize markups.

Suggested Citation

  • Lall, Somik V. & Wang, Hyoung & Munthali, Thomas, 2009. "Explaining high transport costs within Malawi - bad roads or lack of trucking competition ?," Policy Research Working Paper Series 5133, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5133
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    Citations

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    Cited by:

    1. World Bank, 2014. "Republic of Malawi Diagnostic Trade Integration Study Update : Reducing Trade Costs to Promote Competitiveness and Inclusive Growth," World Bank Other Operational Studies 18645, The World Bank.
    2. Bertrand Candelon & Gilbert Colletaz & Christophe Hurlin, 2013. "Network Effects and Infrastructure Productivity in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 887-913, December.
    3. repec:eee:ejores:v:274:y:2019:i:1:p:126-141 is not listed on IDEAS
    4. Rancourt, Marie-Ève & Bellavance, François & Goentzel, Jarrod, 2014. "Market analysis and transportation procurement for food aid in Ethiopia," Socio-Economic Planning Sciences, Elsevier, vol. 48(3), pages 198-219.
    5. repec:bla:worlde:v:40:y:2017:i:3:p:632-652 is not listed on IDEAS
    6. Droppelmann, Klaus & Makuwira, Jonathan & Kumwenda, Ian, 2012. "All eggs in one basket : A reflection on Malawi’s dependence on agricultural growth strategy," IFPRI discussion papers 1177, International Food Policy Research Institute (IFPRI).
    7. Claudia N. Berg & Uwe Deichmann & Yishen Liu & Harris Selod, 2017. "Transport Policies and Development," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 465-480, April.

    More about this item

    Keywords

    Transport Economics Policy&Planning; Rural Roads&Transport; Roads&Highways; Banks&Banking Reform; Rural Transport;

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