Infrastructure and Trade: A Meta-Analysis

Abstract

Abstract. Low levels of infrastructure quality and quantity can create trade impediments through increased transport costs. Since the late 1990s, an increasing number of trade studies have taken infrastructure into account. The purpose of the present paper is to quantify the importance of infrastructure for trade by means of meta-analysis and meta-regression techniques that synthesize various studies. The type of infrastructure that we focus on is mainly public infrastructure in transportation and communication.We examine the impact of infrastructure on trade by means of estimates obtained from 36 primary studies that yielded 542 infrastructure elasticities of trade. We explicitly take into account that infrastructure can be measured in various ways and that its impact depends on the location of the infrastructure. We estimate several meta-regression models that control for observed heterogeneity in terms of variation across different methodologies, infrastructure types, geographical areas and their economic features, model specifications, and publication characteristics. Additionally, random effects account for between-study unspecified heterogeneity, while publication bias is explicitly addressed by means of the Hedges model. After controlling for these issues, we find that a 1 percent increase in own infrastructure increases exports by about 0.6 percent and imports by about 0.3 percent. Such elasticities are generally larger for developing countries, land infrastructure, IV or panel data estimation, and macro-level analyses. They also depend on the inclusion or exclusion of various common covariates in trade regressions.JEL classification: F10, H54, R53, C10, F1, R4

Evaluating the transport-mode-specific trade effects of different transport infrastructure types

“…The regression results moreover suggest that exports are more responsive to changes in infrastructure than imports, a finding that confirms the results of Francois and Manchin (2013). It is also in line with Celbis et al (2014), who find that the e↵ect of a country's own infrastructure is greater on its exports than on its imports. Thus, infrastructure improvements appear to induce firms to export their goods much more than they induce customers to import goods or for firms to import intermediate goods.…”

“…Papers in the first category focus on trade flows that are aggregated over all transport modes, whereas papers in the second category focus on specific transport modes. A more detailed review on infrastructure trade e↵ects can, for example, be found in Celbis et al (2014) or Ferrari et al (2019). One of the seminal papers belonging to the first category is by Limao and Venables (2001), who employ a gravity equation to show that transport infrastructure increases aggregated trade flows.…”

“…It should also be noted that the trade flows used in the analysis are exports. Infrastructure might be constructed in such a way that exports are benefitted more than imports and, consequently, the e↵ect of a country's own infrastructure is larger on exports than on imports (Celbis et al, 2014). Measuring infrastructure e↵ects for exports is thus the preferred option for this type of analysis as export flows can better capture the originally intended infrastructure e↵ects.…”

Cultural Corridors: An Analysis of Persistence in Impacts on Local Development — A Neo-Weberian Perspective on South-East Europe

“…The spatial concentration of such past foci of interest drives a mechanism which has two components: (i) local cultural capital creates the cultural cost of migration, and thus keeps in the locality a part of its human capital that otherwise would have been washed away by economic incentives (see Sjaastad 1962;Harris and Todaro 1970;Falck et al 2014); (ii) these past foci of development are also related to the concentration of transportation networks. The latter is partially endogenous to the current economic development level, but its significance for economic development is crucial, as new investments in transport infrastructure are costly, even if they are possible and realistic investments (see Mori and Nishikimi 2002;Celbis et al 2014). Thus, a cultural corridor unites within itself previous foci of interest which are proxies of past cultural activity and lie on past significant trade and communication roads.…”

Effective Clusters as Territorial Performance Engines in a Regional Development Strategy - A Triple-Layer DEA Assessment of the Aviation Valley in Poland

“…health care), environmental amenities, tourist and recreational facilities, etc. The assessment of the impact of IC on regional development calls generally for a broad multidimensional impact model (see e.g., for a general survey and meta-analytical synthesis Celbis et al 2015).…”