Transport constraints on global competitiveness of developing countries: special problems of landlocked developing countries and the United Nations measures.

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University Degree Business and Administrative studies

                

Keynote presentation by

Anwarul K. Chowdhury

United Nations Under-Secretary-General

and High Representative for the

Least Developed Countries,

Landlocked Developing Countries

and Small Island Developing States

at the

WORLD BANK TRANSPORT FORUM 2003

“Emerging Priorities for Transport”

on

21 January 2003

Preston Auditorium

World Bank Headquarters

Washington, D.C.

TRANSPORT CONSTRAINTS ON GLOBAL COMPETITIVENESS OF DEVELOPING COUNTRIES: SPECIAL PROBLEMS OF

LANDLOCKED DEVELOPING COUNTRIES

AND THE UNITED NATIONS  MEASURES

International trade is generally viewed as the engine of economic growth and a major catalyst for social development. Trade benefits both trading countries as it leads to international division of labour, which utilizes the comparative advantage of each country on producing certain goods and services. This is well supported by empirical evidence. A large number of international cross-sectional analyses have shown strong correlation between trade and economic growth.

Some developing countries, notably the Newly Industrialized Countries (NICs) in East Asia, have grown at a miraculous pace in the past few decades, due to the trade-orientated policy and their favourable geographical location for trade.
Four of the five world’s largest handling ports are in the NICs. This raises the question on the importance of maritime transport to their socio-economic development. Without a doubt, ocean shipping is one of the most important forms of transportation utilized in modern production process. This is largely due to the fact that water-carriage provides a more extensive market than what land-carriage affords and therefore enables a higher degree of labor division and international trade. This is especially important for developing countries notably because of their geographical separation from most of the world’s major markets such as the United States and the European Union.

However, for Landlocked Developing Countries (LLDCs), lack of territorial access to the sea, remoteness and isolation from world markets impose serious constraints on their ability to participate in world trade. The impact of this directly hinders their overall level of socio-economic development. Landlocked developing countries are generally among the poorest of the developing countries, with the weakest growth rates, and are typically heavily dependent on a very limited number of commodities for their export earnings. LLDCs had the weakest GDP per capita growth rate in the 1990s in relation to not only to other developing countries but in relation to the least developed countries classified by the United Nations. Unless this tendency is arrested there a real risk for LLDCs of being further marginalized in the world economy and gap between landlocked developing countries and other developing countries will further widen.  

The seaborne trade of the LLDCs is unavoidably depended on transit through other countries. Additional border crossings and long distance from the market substantially increase the total expenses for the transport services. This implies a relative lack of control over the development of the infrastructure, transport management and policies, which normally will be shaped by the transit country according to considerations of its own interests. In most cases their transit neighbours are themselves developing countries, often of broadly similar economic structure and beset by similar scarcities of resources. The recorded trade between landlocked and transit developing countries tends to be relatively insignificant. In any case, the transit developing countries are typically in no position to offer transport systems of high technical and administrative standards to which their landlocked neighbours might link themselves effectively by the sole development of their own internal transport systems. Establishment of efficient transit transport systems will depend on cooperative arrangements between landlocked developing countries and their transit neighbours.

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High transport costs have negative impacts on international trade and economic growth LLDCs. Firstly, high transport costs reduce profits from exporting products, and as a result reduce the countries’ level of income. They also cause inflation of the price of imported raw materials and semi-finished goods, which is particularly harmful if an economy is highly dependent on imported intermediate goods for production. Moreover, high transport costs also reduce the level of investment, both directly though increasing the costs of imported capital and indirectly through reducing the level of total savings that is available for investment. Both have a negative ...

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Transport constraints on global competitiveness of developing countries: special problems of landlocked developing countries and the United Nations measures.
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  • Level
    University Degree
  • Subject
    Business and Administrative studies
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