Abstract

This survey reviews the current state of the economic literature, assessing the impact of transport policies on growth, inclusion, and sustainability in a developing country context. The findings are summarized and methodologies are critically assessed, especially those dealing with endogeneity issues in empirical studies. The specific implementation challenges of transport policies in developing countries are discussed. Document type: Book

Abstract

Agglomeration economies are among the most important factors to increase firm productivity. However, there is little evidence supportive of this in Africa. By applying the conditional and nested logit models, this paper examines the relationship between firm locations and infrastructure accessibility in Rwanda. It is found that agglomeration economies matter to even one of the smallest countries in Africa. It is also found that infrastructure availability has an important role in affecting the firm location decision. Electricity access and transport connectivity to the domestic and international markets are found to be important to attract new investment. In addition, the quality of local labor supplied, measured by educational attainment, is found as an important determinant of firm location, while the effect of labor costs remains inconclusive. Document type: Book

Abstract

Despite its rapid growth in recent decades, GDP per capita in India remains at a relatively low level by international standards, and the country continues to be marked by large subnational disparities in levels of well-being. These large disparities naturally lead to interest in India’s spatial landscape of potential for economic development. Against this backdrop, this paper presents the results of an analysis of underlying variations in economic potential across Indian districts, where economic potential is defined as the extent to which a district possesses factors that are important determinants of the ability to experience a high level of productivity. The analysis is based on a simple composite Economic Potential Index, which is constructed from variables for which robust evidence exists of their importance as determinants of local productivity. From the analysis, a picture emerges of a heterogeneous landscape of economic potential characterized by strong geographic clustering of districts. The paper also reveals particularly high levels of underperformance, relative to potential, for districts in Uttar Pradesh. Document type: Book

Abstract

Agglomeration economies are among the most important factors in increasing firm productivity. However, there is little evidence supportive of this in Africa. Using the firm registry database in Tanzania, this paper examines a new application of the logit approach with two empirical issues taken into account: spatial autocorrelation and endogeneity of infrastructure placement. The paper finds significant agglomeration economies. It is also found that firms are more likely to be located where local connectivity and access to markets are good. The paper finds that dealing with infrastructure endogeneity and spatial autocorrelation in the empirical model is important. According to the exogeneity test, infrastructure variables are likely endogenous. The spatial autoregressive term is significant. As expected, therefore, there are positive externalities of firm location choice around the neighboring areas. Document type: Book

Abstract

Transport infrastructure is deemed to be central to development and consumes a large fraction of the development assistance envelope. Yet there is debate about the economic impact of road projects. This paper proposes an approach to assess the differential development impacts of alternative road construction and prioritize various proposals, using Nigeria as a case study. Recognizing that there is no perfect measure of economic well-being, a variety of outcome metrics are used, including crop revenue, livestock revenue, non-agricultural income, the probability of being multi-dimensionally poor, and local gross domestic product for Nigeria. Although the measure of transport is the most accurate possible, it is still endogenous because of the nonrandom placement of road infrastructure. This endogeneity is addressed using a seemingly novel instrumental variable termed the natural path: the time it would take to walk along the most logical route connecting two points without taking into account other, bias-causing economic benefits. Further, the analysis considers the potential endogeneity from nonrandom placement of households and markets through carefully chosen control variables. It finds that reducing transportation costs in Nigeria will increase crop revenue, non-agricultural income, the wealth index, and local gross domestic product. Livestock sales increase as well, although this finding is less robust. The probability of being multi-dimensionally poor will decrease. The results also cast light on income diversification and structural changes that may arise. These findings are robust to relaxing the exclusion restriction. The paper also demonstrates how to prioritize alternative road programs by comparing the expected development impacts of alternative New Partnership for Africas Development projects. Document type: Book

Abstract

Infrastructure is an important driving force for economic growth. It reduces trade and transaction costs and stimulates the productivity of the economy. Africa has been lagging behind in the global manufacturing market. Among others, infrastructure is an important constraint in many African countries. Using firm-level data for East Africa, the paper reexamines the relationship between firm performance and infrastructure. It is shown that labor costs are by far the most important to stimulate firm production. Among the infrastructure sectors, electricity costs have the highest output elasticity, followed by transport costs. In addition, the paper shows that the quality of infrastructure is important to increase firm production. In particular, quality transport infrastructure seems to be essential. The paper also finds that agglomeration economies can reduce firm costs. The agglomeration elasticity is estimated at 0.03–0.04. Document type: Book

Abstract

The aim of this paper is to provide feedback on the question of socioeconomic benefits from rural road development and the impact of transport infrastructure on the poor, particularly the poorest and the bottom 20 percent of the population. This paper relies on impact evaluation methodologies, which are traditionally used in social sectors but less so in the transport sector. The study, including first surveys, was launched in 2003 under the Tocantins Sustainable Regional Development Project. The paper highlights the context that led to the project’s design, which included an impact evaluation of the works envisaged under the project. The paper also highlights some of the main challenges faced by this impact evaluation and how these challenges were addressed for the present study. It then provides details about the data collected during the surveys and the key relevant characteristics of the population targeted by the surveys. It discusses the possible estimation methods envisioned to undertake the study and provides the main results of the assessment based on these methods. The analysis shows that improved rural roads changed people’s transport modal choice. People used more public buses and individual motorized vehicles after the rural road improvements. The paper also finds that the project increased school attendance, particularly for girls. Although the evidence is relatively weak in statistical terms, it indicates that the project contributed to increasing agricultural jobs and household income in certain regions. Document type: Book

Abstract

This paper examines the spatial organization of jobs in Kampala, the capital city of Uganda, and applies the Lucas and Rossi-Hansberg (2002) model to explain the observed patterns in terms of the agglomeration forces and the commuting costs of workers. The paper suggests that: (i) Economic activities are concentrated in the downtown -- beyond which employment is spatially dispersed. (ii) Geographically weighted regressions identify five potential subcenters in 2011; however, none of these contribute significantly to employment. When explaining the variation in employment density across localities in Kampala, the research highlights that (i) density falls by 23.5 percent per kilometer increase in distance from the nearest potential subcenter; (ii) an increase in local production externalities of 10 percent increases density by 3.7 percent; and (iii) production externalities in Kampala's potential subcenters are extremely weak to have any significant impact even on nearby tracts. Document type: Book

Abstract

Firms normally keep certain inventories, including raw materials, work-in-progress, and finished goods, to operate seamlessly and not to miss possible business opportunities. But inventory is costly, and the optimal firm inventory differs depending on various economic conditions, including trade and transport costs. The paper examines firm inventory behavior in East Africa, in which transport connectivity, especially to the ports, is considered as one of the major business constraints. Using firm-level data from Burundi, Kenya, Rwanda, Tanzania, and Uganda, it is shown that transport connectivity significantly affects firm inventory behavior. In particular, road density and transport costs to the port are important to determine the optimal inventory level. With more roads in a city and/or cheaper access to the port, firms would hold smaller inventories. Document type: Book

Abstract

Developed at the request of the Mexican G20 Presidency for consideration by the Finance Ministers and Central Bank Governors at the G20 Leaders' Summit in Mexico, and jointly prepared with the Asian Development Bank, this policy paper positioned green transport in the context of cities development. Urban transport determines the shape of a city and its ecological footprint. Many cities in low and middle income countries are at a crossroads. Policy decisions taken now, while car use is still relatively low and cities retain a relatively transit friendly, compact urban form, will affect how people will live in their cities for many decades into the future. A new paradigm of urban transport can be part of the solution to reversing the deteriorating situation in some cities of developing countries, and supporting others to embark on a sustainable, low carbon, green growth path: developing a city for people rather than cars, and including public and mass transport as a major component of the modal structure. Implementing such a new paradigm can be truly transformational. This joint World Bank and Asian Development Bank paper lays out six aspects, which are most difficult to align, yet, are critical to ensure the sustainability of urban transport systems, visionary leadership, integrated strategy for land use and urban transport, coordination among agencies, domestic capacity, adequate cost recovery, and private participation in the operation and construction of urban transport systems. The paper proposes a set of new initiatives for G20 leaders' consideration, including the development of an umbrella toolkit to guide policy makers in charge of urban planning to make transport decisions best suited to their local contexts.