How transport costs depend on infrastructure?

Hyung Do Ahn*, Hong Shik Lee**
Author Information & Copyright
1Korea Institute for International Economic Policy
*Corresponding author: Research Fellow and Director, Center for Northeast Asian Economic Cooperation, Korea Institute for International Economic Policy, Seoul, Korea.
**Corresponding author: Associate Research Fellow, Korea Institute for International Economic Policy, Seoul, Korea.

© Copyright 2003 Jungseok Research Institute of International Logistics and Trade. This is an Open-Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License ( which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.

Published Online: Dec 31, 2003


The real costs of trade, the transport and other costs of doing business internationally, are very important determinants of a country’s ability to participate fully in the world economy. Remoteness and poor transport and communications infrastructure isolate countries, inhibiting their participation in global production networks. This paper investigates the dependence of transport costs on geography and infrastructure It shows that infrastructure is quantitatively important in determining transport costs, and improvements in infrastructure can dramatically increase trade flows. It also finds that the low level of Northeast Asian countries’ trade flows is largely due to poor infrastructure. Competition among countries in East Asia to maintain or become a logistic hub in the region is severe. This is reflected in the competition to build or expand airports and seaports in the region. Competing countries need to find ways of cooperating to achieve an efficient resource allocation in the region as a whole.