Agglomeration Economies and Transport Connectivity Revisited: A Regional Perspective Based on Evidence from the Caucasus and Central Asian Countries

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.

• Record URL:
  • https://openknowledge.worldbank.org/handle/10986/40137
• Supplemental Notes:
  • © 2023 World Bank, Washington, DC.
• Corporate Authors:

  World Bank Group

  Washington, DC  United States 
• Authors:
  • Iimi, Atsushi
• Publication Date: 2023-7

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 31p
• Serial:
  • Policy Research Working Papers
  • Issue Number: 10534
  • Publisher: World Bank
  • Serial URL: https://openknowledge.worldbank.org/handle/10986/9
• Publication flags:

  Open Access (libre)

Subject/Index Terms

• TRT Terms: Connectivity; Economic impacts; Regional analysis; Regression analysis; Shipping
• Geographic Terms: Caucasus; Central Asia
• Subject Areas: Economics; Freight Transportation; Planning and Forecasting;

Filing Info

• Accession Number: 01892545
• Record Type: Publication
• Files: TRIS
• Created Date: Sep 11 2023 11:39AM