Tuesday, February 7, 2012

Being landlocked and making it worse

No matter how you specify your growth regression, it always turns out that being landlocked is bad for a country. The lack of direct access to the sea and thus world markets seems to hurt the capacity to specialize for exports and acquire cheap imports. As a consequence, it stands to reason that any landlocked country should try to circumvent this physical hurdle by creating institutions that foster trade, say by joining free-trade agreements.

Well, the reality seems to be the exact opposite. Ingo Borchert, Batshur Gootiiz, Arti Grover and Aaditya Mattoo find that landlocked economies in general have more restrictive policies in anything that relates to trade and interacting with the rest of the world, such as telecommunications and transportation. And with such policies, international policy assistance is unlikely to have much impact. But one make also ask oneself whether landlocked countries naturally tend to shun the rest to the world, an attitude that is difficult to overcome.

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