Infrastructure and Trade

High tariff barriers to trade in agriculture and textile-apparel as well as non-tariff barriers are not the only reasons explaining the insufficient integration of developing countries in the world trading system. Poor countries are also characterized by a low level of trade-related infrastructure like telecommunications and transportation infrastructure. Studying how this infrastructure affects trade levels and export performance of poor countries is the main topic of research of this program combining different methodologies and tools.

Using econometric techniques, we use large scale databases on trade, trade barriers and transportation costs to measure the role of the lack of infrastructure in explaining "missing" trade.

Additional work focusing on impact evaluation of infrastructure has played a crucial role in the development of the Framework for Improving Rural Infrastructure and Trade-Related Capacities for Market Access (FIMA). Various analytical tools are used to measure impact of infrastructure programs on economic outcomes in Ethiopia, Mozambique, Tanzania, and El Salvador. For instance, in Tanzania, the research approach is based on “difference in difference” estimators while in Ethiopia, an experimental approach is adopted using lottery-like allocation of discount vouchers for connection to a newly installed electricity grid and the purchase of energy efficient light bulbs. A similar approach is adopted in El Salvador, whereas in Mozambique, the impact is measured based on regression discontinuity.