Publication: Agglomeration Economies and Transport Connectivity Revisited: A Regional Perspective Based on Evidence from the Caucasus and Central Asian Countries
Date
2023-08-02
ISSN
Published
2023-08-02
Author(s)
Abstract
Transport connectivity is an
important determinant of agglomeration economies and
urbanization. However, measuring its impacts is a complex
task when causality is considered. An important empirical
challenge comes from potential endogeneity of infrastructure
placement. To deal with the endogeneity problem, first, the
paper constructs detailed georeferenced connectivity
measurements based on micro shipping data collected over 10
years. Then, the system generalized method of moments
regression is applied. Using unique data from the Caucasus
and Central Asian countries, the paper estimates the impact
of transport connectivity on agglomeration economies. It
finds that agglomeration economies are significant and
persistent in the region. Thus, the existing firm clusters
are likely to continue growing. However, a constraint is
also found. Large cities exhibit congestion diseconomies.
Finally, the paper shows that the improvement of transport
connectivity, especially local market accessibility, has a
significant effect on agglomeration. By contrast, no clear
evidence to support the impact of improved regional
connectivity on agglomeration is observed yet. To take full
advantage of agglomeration economies at the regional level,
further efforts may be needed, for instance, toward
increasing efficiency in transportation and logistics,
improving the freight load, and/or reducing the time and
costs of border crossing, which add to overall transport
costs and times.
Link to Data Set
Citation
“Iimi, Atsushi. 2023. Agglomeration Economies and Transport Connectivity Revisited: A Regional Perspective Based on Evidence from the Caucasus and Central Asian Countries. Policy Research Working Papers; 10534. © World Bank, Washington, DC. http://hdl.handle.net/10986/40137 License: CC BY 3.0 IGO.”