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December 1999 - The median landlocked country has only 30 percent of the trade volume of the median coastal economy. Halving transport costs increases that trade volume by a factor of five. Improving the standard of infrastructure from that of the bottom quarter of countries to that of the median country increases trade by 50 percent. Improving infrastructure in Sub-Saharan Africa is especially important for increasing African trade. Limao and Venables use three different data sets to investigate how transport depends on geography and infrastructure. Landlocked countries have high transport costs, which can be substantially reduced by improving the quality of their infrastructure and that of transit countries. Analysis of bilateral trade data confirms the importance of infrastructure. Limao and Venables estimate the elasticity of trade flows with regard to transport costs to be high, at about -2.5. This means that: The median landlocked country has only 30 percent of the trade volume of the median coastal economy; Halving transport costs increases the volume of trade by a factor of five; Improving infrastructure from the 75th to the 50th percentile increases trade by 50 percent. Using their results and a basic gravity model to study Sub-Saharan African trade, both internally and with the rest of the world, Limao and Venables find that infrastructure problems largely explain the relatively low levels of African trade. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to investigate the effects of geography on economic performance. The authors may be contacted at ngl4@columbia.edu or avenables@worldbank.org.

Elasticity --- Fixed Costs --- High Transport --- Infrastructure --- Infrastructure Investment --- International Transport --- Journey --- Journeys --- Quality Of Transport --- Rail --- Road --- Routes --- Trans Transit Routes --- Transport --- Transport Costs --- Transport Economics --- Transport Economics, Policy and Planning --- Travel --- Trips --- True

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This paper shows that the institutional environment and the ability to export on time are sources of comparative advantage as important as factors of production. In particular, the ability to export on time is crucial to explain comparative advantage in intermediate goods. These findings underscore the importance of investing in infrastructure and fostering trade facilitation to boost a country's participation in production networks. Furthermore, the paper contributes to the so-called "distance puzzle" by showing that the increasing importance of distance over time is in part driven by trade in intermediate goods.

Bilateral Trade --- Capital Goods --- Comparative Advantage --- Economic Theory & Research --- End Use --- Environment --- Environmental Economics & Policies --- Exports --- Factors of Production --- Final Goods --- Free Trade --- Intermediate Goods --- International Economics and Trade --- Macroeconomics and Economic Growth --- Quality of Transport --- Trade Facilitation --- Trade Policy --- Transport --- Transport Economics Policy & Planning

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This paper investigates the role of services in the household response to trade reforms in Vietnam. The relative response of the households and income growth after a major trade liberalization in rice are analyzed aiming to answer the following questions: What type of households, in which locations, having access to what type of services, benefited more from the reforms? It focuses on services that have an impact on transaction costs (roads or quality of roads, public transportation, access to credit, extension services, and availability of markets in communication services) because transaction costs are often cited as a barrier to rural households in responding to the price changes and increased incentives offered by trade and other policy reforms. The results suggest that availability of production related services contributes positively to the impact of trade reforms. Although most of the service variables have a positive and significant effect on growth in income, some that are expected to have an impact are not significant. This may be explained by the exceptional coverage of infrastructure services in Vietnam even before the reforms. When service availability is very similar across different localities, household characteristics become more important in determining the response.

Alternative Transport --- Communities & Human Settlements --- Costs --- Economic Theory and Research --- Finance and Financial Sector Development --- Financial Literacy --- Good Transport --- Housing and Human Habitats --- Infrastructure --- Macroeconomics and Economic Growth --- Poverty Reduction --- Price Changes --- Public Transport --- Public Transportation --- Quality of Transport --- Road --- Road Network --- Road Quality --- Roads --- Rural Development --- Rural Infrastructure --- Rural Poverty Reduction --- School Access --- Signals --- Transport --- Transport Costs --- Transport Economics, Policy and Planning --- Transport Efficiency --- Transport System --- Transportation Costs --- True