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

The connections between transport infrastructure and economic development have been extensively analyzed in previous research, but little is known about the cost of infrastructure investments in poor countries. This paper examines drivers of unit costs of construction and maintenance of transport infrastructure in low and middle income countries and documents that: (i) there is a large dispersion in unit costs for comparable road work activities; (ii) after accounting for environmental drivers of costs, residual unit costs are significantly higher in conflict countries; (iii) there is evidence that costs are higher in countries with higher levels of corruption; (iv) these effects are robust to controlling for a country’s public investment capacity and business environment. Our findings have implications for governments aiming to increase connectivity in poor countries. Document type: Book

Abstract

This paper examines the issue of measuring logistics costs from an applied trade policy research perspective, as well as identifying logistics-intensive sectors. It focuses on currently available data at the macro-and firm-levels. This paper has two main aims. First, it provides a first overview of currently available data relevant to logistics, and suggests some preliminary applications. The second objective of this paper is to frame the issue of logistics cost measurement and data collection in terms of the types of inputs needed for applied trade policy research. The paper is organized as follows. The next section presents an overview of possible directions in applied trade policy research using logistics data. Section three examines existing data sources that can be used to measure domestic logistics costs, focusing on the national accounts, input-output tables, price comparisons, and firm-level data. Section four presents a new methodology for measuring international trade costs, and identifies the proportion of those costs due to logistics. Section five uses input-output data to identify logistics-intensive sectors in a range of countries. Section six concludes. This paper has explored a number of different data sources and methodologies in an effort to move forward on the analysis of logistics costs from a trade policy research perspective. In the future, it will be important to distinguish between data collection efforts that are industry-driven-such as estimates of total logistics costs in Gross Domestic Product (GDP)-and those that are research-driven. Moving further in this direction will help fuel research that identifies sectors in particular countries that are most sensitive to improvements in logistics performance, and which therefore will tend to expand relative to other sectors in the face of logistics sector reforms. From a policy and political economy point of view, it will be important to identify such sectors and make them aware of the potential role logistics can play in facilitating their growth. 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

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

This investment climate analysis reviews the experiences of over 3000 surveyed business owners in 26 states of Nigeria about the aspects of the business climate that affect their businesses. It complements a similar study in 2007 that covered 11 other Nigerian states. The survey asks business owners about both their perceptions and the actual costs of selected constraints. The analysis benchmarks Nigeria against comparator countries, and provides detailed data for each state. Nigerian firms have low productivity, as measured by their output in relation to their labor and capital inputs. Firms in Kenya are about 40 percent more efficient, firms in Russia almost twice as productive, and firms in South Africa almost four times as productive. Nigerian firms that export are about 90 percent more productive than non-exporters. Although labor in Nigeria is inexpensive, it is not inexpensive enough to compensate for this low productivity. The poor performance of Nigerian firms reflects many factors. This study focuses on constraints in the business climate and the serious costs they impose on Nigerian firms. Taken together, the total indirect costs of poor quality infrastructure, crime and security, and corruption amount to over 10 percent of sales for Nigerian firms. This is twice as high as in South Africa, Brazil, Russia and Indonesia. Microenterprises firms with fewer than five workers face similar constraints as larger firm's unreliable power, limited access to finance, corruption, and transportation bottlenecks. But the consequences for their businesses are far more severe. For instance, most microenterprises cannot afford generators, so power outages are more likely to shut down their operation. Lacking collateral, almost no microenterprises have access to formal external financing. Document type: Book

Abstract

Landlocked developing countries (LLDCs) are completely dependent on their transit neighbors infrastructure and administrative procedures to transport their goods to port. This publication provides a comprehensive ten-year review in order to assess the progress made in improving access of LLDCs to global markets, identify the remaining challenges faced by LLDCs, and present improved and innovative ways to overcome them. This publication is based on the practical knowledge from implementing the Almaty Program policies, shared by both of our institutions. It provides a snapshot of the economic trends in LLDCs, with regard to trade costs, connectivity constraints and trade diversification. It reviews the key access policies in the Almaty Program of Action framework that include infrastructure, transport and logistics services, regional integration, trade and transit facilitation. It combines data and substantial feedback from implemented projects and policy changes. The focus of the document is general in scope and does not include detailed economic or policy analysis of all the potential components of reforms. The publication is organized as follows: Chapter1: Economics of Landlockedness; Chapter 2: Connectivity Constraints; Chapter 3: Hinterland Connections; Chapter 4: Transit and Trade Facilitation, Regional Integration; Chapter 5: Physical Connectivity, Corridors. This document is based primarily on the experience of project implementation by the World Bank, and on analytical work on trade corridors and LLDCs, including reports and presentations on progress in implementing the Almaty Program of Action.

Abstract

The Sahel is experiencing rapid and disorderly urbanization. The capital cities of Bamako, Conakry, and Niamey dominate the urban landscape in their respective countries. In each of these three countries, the economic importance of the capital city is enormous. For instance, Bamako represents about 34 percent of gross domestic product (GDP), whereas Conakry and Niamey each represent about 27 percent of GDP in their respective countries. Furthermore, as their populations are increasing at a faster rate than anywhere else in the world, the attendant youth bulge could turn into either a demographic dividend, whereby cities take advantage of a temporary boom in the working age population to productively employ young people, or a demographic disaster, accompanied by urban instability if cities do not meet these aspirations.

Abstract

The Malaysian economy decelerated as solid domestic demand was not sufficient to offset a weakening external environment. Private consumption growth continued at a healthy pace. Favorable rubber and palm oil prices drove up incomes of smallholders while continued employment and wage growth supported urban incomes. In contrast, fixed investment was more volatile, with private investment showing signs of picking up while public investments lagged. Malaysia's overall balance of payments recorded a larger surplus in the first half of the year reflecting a widening current account surplus and substantial net financial inflows. Malaysia's open economy is expected to slow further in the remainder of 2011 and into early 2012 mainly due to the deterioration in the outlook for external demand. Cities are central to Malaysia's aspiration to become a high-income economy. Smart cities are skilled and innovative. They play a crucial role in catalyzing economic growth by generating productivity gains through agglomeration economies. Smart cities are green and sustainable. They ensure a high quality of life to all citizens and the sustainability of economic gains. Finally, smart cities are resilient.

Abstract

This study is part of the ongoing dialogue on reforming trade logistics, and facilitating trade and transportation in Central and South Asian countries. It presents key findings from several rounds of first-hand observations and interviews conducted with multiple stakeholders to measure the performance of key road transport corridors across the region, including Kazakhstan, Kyrgyz Republic, Tajikistan, and to some extent, Pakistan and Afghanistan. The study identifies obstacles that hinder efficient movement of goods along transport corridors, and offers recommendations for short- and medium-term reforms for participating country governments with particular emphasis on the performance of border crossings. The overall objective of this study is to provide basic information on transport corridor performance so that national policy makers and private sectors have a basis to open discussions on how they might cooperate to facilitate international trade and transport by addressing infrastructure and operational bottlenecks in the region.