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  • Domestic road infrastructur...
    Coşar, A. Kerem; Demir, Banu

    Journal of development economics, January 2016, 2016-01-00, 20160101, 2016, Letnik: 118
    Journal Article

    Drawing on the large-scale public investment in roads undertaken in Turkey during the 2000s, this paper contributes to our understanding of how internal transportation infrastructure affects regional access to international markets. Using data on international trade of Turkish provinces and the change in the capacity of the roads connecting them to the international gateways of the country, we estimate the distance elasticity of trade associated with roads of varying capacity. Three key results emerge. First, the cost of an average shipment over a high-capacity expressway is about 70% lower than it is over single-lane roads. Second, the present value of a 10-year stream of trade flows generated by a one-dollar investment in road infrastructure ranges between $0.7 and $2. Third, the reduction in transportation costs is greater the more transportation-sensitive an industry is. To the extent that efficient logistics enable countries to take part in global supply chains and exploit their comparative advantages, our findings have important developmental implications. •Internal transportation infrastructure matters for access to international markets.•Turkey undertook a major upgrade to its intercity road network during the 2000s.•Using data from this episode, we estimate the reduction in transport costs.