Landlockedness, Infrastructure And Trade : New Estimates For Central Asian Countries

Holding Together or Falling Apart: Results of the Gravity Equation of CIS Trade

“…For instance, Raballand (2003) assessed a negative impact of the landlockedness and found that the number of border crossings along with long distance was crucial to explaining the level of trade flows. Grigorou (2007) and Carrere and Grigorou (2008) looked at the three factors that matter for the region: overland transportation costs, bargaining power with transit countries and the infrastructure of the latter. Moreover, of these three components, only the transit countries' infrastructure is specific to Central Asia: improvements in infrastructure of the transit-country raise trade three times more for Central Asian countries than for other landlocked countries.…”

Estimating the Constraints to Trade of Developing Countries

“…One should note the large variability in the overland distance to the sea faced by the landlocked countries. For example, central Asian countries are far more remote from the sea than other landlocked countries (Grigoriou, 2007). However, Limão and Venables (2001) have shown that landlocked situations increase transport costs by more than what can be explained by the additional distance alone.…”

“…According to Limão and Venables (2001) poor road infrastructure represents 40% of the transport costs predicted for coastal countries and 60% for landlocked countries. In addition, port infrastructure and efficiency, and the transportation infrastructure in a transit country can be problems (Hummels, 2001, Grigoriou, 2007, Raballand and Macchi, 2008, and Djankov et al, 2010. A key factor for trade is the road corridor linking the main economic center of a landlocked country to the seaport.…”

“…This implies both a hedging and a depreciation cost in addition to a barrier to export diversification as a landlocked country cannot engage in the production of time sensitive goods or in the production of part of goods that are internationally fragmented (Hummels, 2001, Grigoriou, 2007, Raballand and Macchi, 2008. The findings of Freund and Rocha (2010) provide a useful quantification of the time cost of trade.…”

“…This is consistent with findings of other studies. For example Grigoriou (2007), on the basis of a gravity model, found that ceteris paribus a landlocked country imports 22% less and exports 34% less than a coastal economy. In contrast, results show that being an island is not a significant disadvantage.…”