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GTAP Resources: Resource Display

GTAP Resource #3530

"Improving on Africa's roads - Modeling infrastructure investment and its effect on subsistence agriculture"
by Schuerenberg-Frosch, Hannah


Abstract
Investment in infrastructure is considered as a crucial prerequisite for sustainable economic development. In this paper I focus on transport infrastructure. I develop a theoretical general equilibrium model. In this model setup with two goods, a consumption good and a transport good, one representative agent and two factors of production, it is shown that supply, production and consumption can be increased by means of reduced transport costs if transport infrastructure is improved. Easier transport of goods to markets frees up labour and capital for the use in production.

The fact that better transport networks reduce transport costs is then confirmed empirically. Using cross-sectional data for 53 countries and controlling for a number of country characteristics it is shown that a higher road length signicantly reduces the agricultural trade and transport margin.

The theoretical model setup and the results of the estimation are then combined in a Computable General Equilibrium (CGE) model which additionally includes multiple goods and households, international trade, subsistence agriculture, public investment as well as O&M costs. The model is calibrated to a stylized African economy. It is shown that an increased quality and quantity of transport infrastructure increases producer prices and simultaneously reduces consumer prices. Production, consumption and exports rise on the aggregate and disaggregate level. However, the assumed efficiency of infrastructure provision as well as the size of O&M cost are crucial concerning the magnitude of these effects.

This paper contributes to the existing literature on road infrastructure especially by showing how transport infrastructure investment could be modelled in a general equilibrium setup and by integrating the dimension of market participation of rural households into the analysis. The model could easily be calibrated to other data and be modied to include other forms of infrastructure.



Resource Details (Export Citation) GTAP Keywords
Category: 2011 Conference Paper
Status: Published
By/In: Presented at the 14th Annual Conference on Global Economic Analysis, Venice, Italy
Date: 2011
Version:
Created: Schuerenberg-Frosch, H. (4/12/2011)
Updated: Schuerenberg-Frosch, H. (6/22/2011)
Visits: 955
- Agricultural policies
- Economic development
- Calibration and parameter estimation
- Africa (Southern)


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  File format 2011 Conference Paper Files  (1.2 KB)   Replicated: 0 time(s)
  File format Schuerenberg-Frosch: Improving on Africa's Roads (June 2011 version)  (1.4 MB)   Replicated: 0 time(s)


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Last Modified: 9/15/2023 2:05:45 PM