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Roadways, Input Sourcing, and Patterns of Specialization

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  • Esteban Jaimovich
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.

Suggested Citation

  • Esteban Jaimovich, 2018. "Roadways, Input Sourcing, and Patterns of Specialization," Documentos de Trabajo 16394, The Latin American and Caribbean Economic Association (LACEA).
    • Handle: RePEc:col:000518:016394
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    More about this item

    Keywords

    International Trade; Comparative Advantage; Internal Transportation Costs;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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