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Landlockedness, Transit and Road Quality: an Attempt to Measure the Impact on Trade Flows

Landlockedness, Transit and Road Quality: an Attempt to Measure the Impact on Trade Flows. Souleymane Coulibaly University of Lausanne and University of Paris 1 UNCTAD Expert Meeting Geneva, Palais des Nations November 24-26, 2004.

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Landlockedness, Transit and Road Quality: an Attempt to Measure the Impact on Trade Flows

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  1. Landlockedness, Transit and Road Quality: an Attempt to Measure the Impact on Trade Flows Souleymane Coulibaly University of Lausanne and University of Paris 1 UNCTAD Expert Meeting Geneva, Palais des Nations November 24-26, 2004

  2. "The road to hell is unpaved", The Economist print edition 2000 "The plan was to carry 1,600 crates of Guinness and other drinks from the factory in Douala where they were brewed to Bertoua, a small town in Cameroon's south-eastern rainforest. As the crow flies, this is less than 500km (313 miles) ... According to a rather optimistic schedule, it should have taken 20 hours, including an overnight rest. It took four days. When the truck arrived, it was carrying only two-thirds of its original load. "

  3. Issues examined • To what extent does the lack of transportation infrastructures hinder trade? • What is the contribution of geographical impediments to this “missing trade”? • What is the magnitude of untapped trade potential in the South?

  4. Focus on West African Economic an Monetary Union

  5. Table 1: Roads in WAEMU

  6. Table 2: Border infrastructure and accessibility to some trading partners

  7. Geographical structure of the model - Road distance from j to i - Quality of this road distance

  8. Intra-regional geographical impediments • Borders • Transit distance • Quality of the bilateral infrastructure

  9. Extra-regional geographical impediments • Sea distance (coastal countries) • Sea distance and transit distance (landlocked countries)

  10. Methodology • Use the Armington assumption • Derive a gravity-type equation • Re-express the equation relatively to France • Use proxy variables catching geographical impediments • Correct for endogeneity problem • Estimate the model

  11. The trade impact of geography • two landlocked WAEMU countries trade 92% less than others trading partners • Crossing a transit country induces 17% less trade, accounting for 6% of total trade costs • Paving all inter-state roads would increase trade by a factor of three

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