Essays in Political Economy
Edited by Susan Rose-Ackerman and Paul Lagunes
Chapter 8: Corruption and trade costs
An established literature argues that reducing trade costs can substantially increase income and improve welfare in trading countries (Frankel and Romer 1999; Rodrik and Rodriguez 2000; Limao and Venables 2001; Obstfeld and Rogoff 2001). Although the standard approach to measuring trade costs focuses on tariff barriers, recent rounds of tariff liberalization led by the WTO have significantly reduced the impact of tariffs on the cost of trade. As a result, attention has shifted to other forms of non tariff barriers to trade such as the costs associated with the transport of goods across space (Anderson and Wincoop 2004; Donaldson forthcoming). Decades of substantial investments in road, rail and port infrastructure have not yet led to a substantial decline in transport costs, particularly in Sub Saharan Africa where these costs are highest. Hummels (2008) documents how high transport costs currently generate a higher effective rate of protection than tariffs in most of the developing world and Limao and Venables (2001) argue that the low quality of transport infrastructure accounts for an important part of the developing world’s poor trade performance. In 2011, shipping a container from a firm in the African sub continent was still almost twice as expensive as shipping it from India, and six times more time consuming than shipping it from the US (World Bank 2011).
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.