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Infrastructure, market access and trade in developing countries

Moore, Alexander (2015) Infrastructure, market access and trade in developing countries. PhD thesis, London School of Economics and Political Science.

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International trade is a key driver of development. This thesis contains three chapters concerned with the challenges of, and opportunities for, expanding international trade in developing countries. The first chapter, “Growth Spillovers and Market Access in Africa”, shows that because of increased trade, African countries benefit from the growth of their neighbours. In particular, growth in neighbouring countries increases the size of accessible markets, boosting export demand for local goods. Over the period 1992-2012, this expansion of markets increased domestic growth rates by over 2 percent per year on average. By reducing trade costs, countries can further increase these positive growth spillovers. The second chapter, “Bad Neighbours as Obstacles to Trade: Evidence from African Civil Wars”, considers how the trade of landlocked African countries is affected by neighbouring civil wars. The paper shows that such civil wars increase transport costs and subsequently reduce the international trade of landlocked countries. Calibrating the regression results, I estimate that landlocked trade could have been around 12 percent higher over the period 1975-2005 in the absence of neighbouring civil wars. The final chapter, “Regulation, Renegotiation and Capital Structure: Theory and Evidence from Latin American Transport Concessions”, is joint work with Stephane Straub and Jean-Jacques Dethier. Large transport projects in developing countries are now often delivered through private concessions, and we analyse the financing of such projects. A common argument is that firms use leverage in order to influence regulatory outcomes. Intuitively, firms can extract higher prices by increasing leverage if regulators fear project collapse. We show that under price cap regulation, this mechanism is weakened because prices are less responsive to costs. Consistent with the theory, we find evidence that infrastructure firms in Latin America use less debt when regulated through price cap.

Item Type: Thesis (PhD)
Additional Information: © 2015 Alexander James Moore
Library of Congress subject classification: H Social Sciences > HG Finance
Sets: Departments > Economics
Supervisor: Besley, Timothy

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