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Roadways, Input Sourcing, and Patterns of Specialization

Esteban Jaimovich ()

DOUMENTOS DE TRABAJO LACEA from THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA

Abstract: We propose a model where the internal transport network facilitates the sourcing of intermediate goods from different locations. A denser internal transport network promotes thus the growth of industries that rely on a large variety of inputs. The model shows that heterogeneities in internal transport infrastructures can become a key factor in shaping comparative advantage and specialization. Moreover, when sufficiently pronounced, such heterogeneities may even overshadow more traditional sources of specialization based on factor productivities. Evidence based on industry-level trade data grants support to the main prediction of the model: countries with denser road networks export relatively more in industries that exhibit broader input bases. We show that this correlation is robust to several possible confounding effects proposed by the literature, such as the impact of institutions on specialization in complex goods. Furthermore, we show that a similar correlation arises as well when the density of the local transport network is measured by the density of their internal waterways, and also when road density is instrumented with measures of terrain roughness.

Keywords: International Trade; Comparative Advantage; Internal Transportation Costs (search for similar items in EconPapers)
JEL-codes: F11 O18 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-tre and nep-ure
Date: 2018-06-28
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Persistent link: https://EconPapers.repec.org/RePEc:col:000518:016394

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