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How infrastructure shapes comparative advantage

This paper provides evidence that domestic trade costs are a source of comparative advantage. First, I build an international trade and internal geography model with transportation features and input-output linkages. Then, I simulate how a large road project, Ruta del Sol, impacts the comparative advantage of Colombia. This road improves access to global markets for heterogeneous regions. My results show that the project shifts the comparative advantage of Colombia towards manufacturing. Industry linkages reinforce this effect. Hence, I confirm that a country’s comparative advantage is shaped by domestic trade costs, in addition to classical determinants like endowments, technology, and institutions. Lastly, my results suggest that road infrastructure is key for the structural transformation of developing nations.

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Subject

Ciudades | Desarrollo urbano | Economía | Infraestructura | Investigación socioeconómica | Movilidad urbana | Sector público | Transporte

País / Región

América Latina y el Caribe
Colombia

URI

https://scioteca.caf.com/handle/123456789/1920

Date

2022-06-30

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6.1 Documentos de trabajo en investigación socioeconómica

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CC-BY-NC-ND
Except where otherwised noted, this item's license is described as CC-BY-NC-ND
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How Infrastracture Shapes Comparative Advantages.pdf (2.36 MB)

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CAF

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