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Sunday, 21 March 2010

What constrains Africa's exports?

A new paper argues that "inland transit times", not documentation or port handling / customs clearance are the binding constraint on African exports :

We find that transit delays have the most economically and statically significant effect on exports. A one-day reduction in inland travel times leads to a 7 percent increase in exports. Put another way, a one day reduction in inland travel times translates to a 1.5 percentage point decrease in all importing-country tariffs. By contrast, longer delays in the other areas have a far smaller impact on trade. The analysis controls for the possibility that greater trade leads to shorter delays...
From the Zambian perspective, this appears to have two implications. First, being landlocked need not be a curse as far as exports are concerned. Yes, we are dependent on our neighbours on port access, and it is right we are doing something about this, but more critical is improving our internal infrastructure. Secondly, the focus is rightly on "times" not necessary length. This would suggest that our focus on infrastructure should prioritise both swifter modes of travel (e.g. rail) but also better connected road systems. Improving "road connectivity" appears critical. The North-South Project is a step in the right direct, but now we must do more to ensure that all provinces are properly connected to this corridor.  

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