Improving Logistics Costs for Transportation and Trade Facilitation

Access to basic infrastructure services - roads, electricity, water, sanitation - and the efficient provision of the services, is a key challenge in the fight against poverty. Many of the poor (and particularly the extreme poor) in rural communities in Latin America live on average 5 kilometers or more from the nearest paved road, which is almost twice as far as non-poor rural households. There have been major improvements in access to water, sanitation, electricity, telecommunications, ports, and airports, but road coverage has not changed much, although some effort and resources have been invested to improve the quality of road networks. This paper focuses on the main determinants of logistics costs and physical access to services and, whenever possible, provides evidence of the effects of these determinants on competitiveness, growth, and poverty in Latin American economies. The analysis shows the impact of improving infrastructure and logistics costs on three fronts - macro (growth), micro (productivity at the firm level), and poverty (the earnings of poor/rural people). In addition, the paper provides recommendations and solutions that encompass a series of policies to reduce the prevalent high logistics costs and limited access to services in Latin America. The recommendations rely on applied economic analysis on logistics and trade facilitation.

[1]  E. Gramlich,et al.  Infrastructure Investment: A Review Essay , 1994 .

[2]  Sebastian Galiani,et al.  Water for Life: The Impact of the Privatization of Water Services on Child Mortality , 2004, Journal of Political Economy.

[3]  C. Mann,et al.  Trade Facilitation and Economic Development: Measuring the Impact , 2003 .

[4]  Panicos O. Demetriades,et al.  Intertemporal Output and Employment Effects of Public Infrastructure Capital: Evidence from 12 OECD Economies , 2000 .

[5]  John G. Fernald,et al.  Roads to Prosperity?: Assessing the Link Between Public Capital and Productivity , 1997 .

[6]  Luis Servén,et al.  The Limits of Stabilization: Infrastructure, Public Deficits and Growth in Latin America , 2003 .

[7]  L. Röller,et al.  Telecommunications Infrastructure and Economic Development: a Simultaneous Approach Forschungsschwerpunkt Marktprozeß Und Unter- Nehmensentwicklung Research Area Market Processes and Corporate Development Abstract Telecommunications Infrastructure and Economic Development: a Simultaneous Approach * , 1996 .

[8]  C. Gannon,et al.  POVERTY AND TRANSPORT , 1997 .

[9]  J. Guasch,et al.  Inventories and logistic costs in developing countries: levels and determinants, a red flag on competitiveness and growth , 2005 .

[10]  Antonio Estache,et al.  Infrastructure Services in Developing Countries: Access, Quality, Costs, and Policy Reform , 2004 .

[11]  Donald J. Bowersox,et al.  Estimation of global and national logistics expenditures : 2002 data update , 2005 .

[12]  J. Guasch,et al.  Just-in-Case Inventories: A Cross-Country Analysis , 2003 .

[13]  Badi H. Baltagi,et al.  Public capital stock and state productivity growth: Further evidence from an error components model , 1995 .

[14]  Antonio Estache.  Emerging Infrastructure Policy Issues in Developing Countries: A Survey of the Recent Economic Literature , 2004 .

[15]  Douglas Holtz-Eakin,et al.  Public-Sector Capital and the Productivity Puzzle , 1992 .

[16]  A. Gordon,et al.  Livelihood diversification in Uganda: patterns and determinants of change across two rural districts , 2001 .

[17]  Hau L. Lee,et al.  Global Logistics Indicators, Supply Chain Metrics, and Bilateral Trade Patterns , 2005 .

[18]  H. Esfahani,et al.  Institutions, Infrastructure, and Economic Growth , 1999 .

[19]  V. Foster,et al.  Accounting for Poverty in Infrastructure Reform: Learning from Latin America's Experience. WBI Development Studies. , 2001 .

[20]  L. Serven,et al.  The Output Cost of Latin America’s Infrastructure Gap , 2002 .

[21]  Tomás Serebrisky,et al.  Competition regimes and air transport costs: The effects of open skies agreements , 2006 .

[22]  J. Wilson,et al.  Moving Forward Faster: Trade Facilitation Reform and Mexican Competitiveness , 2006 .

[23]  P. Cashin.  Government Spending, Taxes, and Economic Growth , 1994, SSRN Electronic Journal.

[24]  P. Guerrero,et al.  Trade Logistic and Regional Integration in Latin America & the Caribbean , 2009 .

[25]  G. Wilmsmeier,et al.  Logistics, transport and food prices in LAC : policy guidance for improving efficiency and reducing costs , 2009 .

[26]  C. Mann,et al.  Assessing the Potential Benefit of Trade Facilitation: A Global Perspective , 2004 .

[27]  David Alan Aschauer,et al.  IS PUBLIC EXPENDITURE PRODUCTIVE , 1989 .

[28]  Quentin Wodon,et al.  Achieving child-health-related Millennium Development Goals: The role of infrastructure , 2005 .

[29]  C. Hulten,et al.  Infrastructure Capital and Economic Growth: How Well You Use it May Be More Important than How Much You Have , 1996 .

[30]  L. Serven,et al.  The Effects of Infrastructure Development on Growth and Income Distribution , 2004 .

[31]  M. Kerf,et al.  Infrastructure and poverty linkages: A literature review , 2002 .

[32]  Marianne Fay,et al.  Infrastructure in Latin America and the Caribbean: Recent Developments and Key Challenges , 2006 .

[33]  Antonio Estache,et al.  World development report 1994 : infrastructure for development , 1994 .

[34]  J. Luis Guasch,et al.  Inventories in Developing Countries: Levels and Determinants - a Red Flag for Competitiveness and Growth , 2001 .

[35]  David Canning,et al.  The Contribution of Infrastructure to Aggregate Output , 1999 .