Connecting Costs and Distance: How Infrastructure Development Facilitates Trade—A Case-Based Analysis Informed by Trade Cost Theory and the Gravity Model

Poshan Yu (), Yitian Chen and Yansong Wang
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Poshan Yu: Soochow University
Yitian Chen: Soochow University
Yansong Wang: Soochow University

Chapter Chapter 6 in International Trade and Economic Development in BRICS, 2026, pp 123-149 from Springer

Abstract: Abstract Infrastructure development serves as a pivotal mechanism for reducing trade costs and compressing economic distance, particularly within the context of the BRICS economies. Moving beyond a traditional view of infrastructure as merely physical assets, this chapter employs a dual-path framework grounded in trade cost theory and the extended gravity model. The framework conceptualizes infrastructure as a multi-layered system that facilitates trade through two primary channels: directly lowering transport, procedural, and institutional costs, and reducing systemic economic distance via enhanced institutional and digital connectivity. Three case studies—the China-Russia-Kazakhstan rail corridor, a gravity model analysis of China-India trade, and the BRICS digital customs platform—substantiate the argument, demonstrating that effective trade integration hinges on a hybrid strategy combining hard infrastructure with interoperable digital systems and harmonized regulatory frameworks. The study concludes by identifying persistent structural barriers and proposing targeted policy strategies to enhance connectivity within the BRICS bloc.

Keywords: Digital customs; Economic distance; Gravity model; Infrastructure; Institutional coordination; Trade costs; Trade facilitation (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-981-95-8801-5_6

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DOI: 10.1007/978-981-95-8801-5_6

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