Trade, Infrastructure, and Roadways in Europe and Central Asia: New Empirical Evidence

Ben Shepherd · John S. Wilson

34 citations0/0 files storedJournal of Economic Integration

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Global trade and economics transportation and logistics systems Global Politics and Economy

Abstract

Infrastructure quality is a crucial determinant of trade.To assess the importance of regional infrastructure externalities, we use detailed overland transit information from an original road network database.Gravity model simulations suggest that an ambitious but feasible road upgrade could increase trade by 50% over baseline, exceeding the expected gains from tariff reductions or trade facilitation programs of comparable scope.Cross-country spillovers due to overland transit are very large: total intraregional trade could be increased by 30% by upgrading roads in just three countries-Albania, Hungary and Romania.These results bolster the case for regional coordination of infrastructure investments.

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References

2003Gravity with Gravitas: A Solution to the Border Puzzle 2006The Log of Gravity 2001Infrastructure, Geographical Disadvantage, Transport Costs, and Trade 2006Gravity for Dummies and Dummies for Gravity Equations 2004The Puzzling Persistence of the Distance Effect on Bilateral Trade 2004Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model 2007Estimating Trade Flows: Trading Partners and Trading Volumes 1999Infrastructure, transport costs and trade

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