Farther on down the Road: Transport Costs, Trade and Urban Growth in Sub-Saharan Africa

April 23 2016

This article investigates the role of intercity transport costs in determining the income of sub-Saharan African cities. In particular, focusing on fifteen countries whose largest city is a port, I find that an oil price increase of the magnitude experienced between 2002 and 2008 induces the income of cities near that port to increase by 7% relative to otherwise identical cities 500 km farther away. Combined with external estimates, this implies an elasticity of city economic activity with respect to transport costs of −0.28 at 500 km from the port. Moreover, the effect differs by the surface of roads between cities. Cities connected to the port by paved roads are chiefly affected by transport costs to the port, while cities connected to the port by unpaved roads are more affected by connections to secondary centres.

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Adam Storeygard is an Assistant Professor of Economics at Tufts University specializing in urban and development economics.