Limao and Venables use three different data sets to The median landlocked country has only 30 percent
investigate how transport depends on geography and of the trade volume of the median coastal economy.
infrastructure. Landlocked countries have high transport Halving transport costs increases the volume of
costs, which can be substantially reduced by improving trade by a factor of five.
the quality of their infrastructure and that of transit Improving infrastructure from the 75th to the 50th
countries. percentile increases trade by 50 percent.
Analysis of bilateral trade data confirms the Using their results and a basic gravity model to study
importance of infrastructure. Limao and Venables Sub-Saharan African trade, both internally and with the
estimate the elasticity of trade flows with regard to rest of the world, Limao and Venables find that
transport costs to be high, at about -2.5. This means infrastructure problems largely explain the relatively low
that: levels of African trade.