Development of Domestic Trade Infrastructure

The World Bank recently released a Trade Logistics Performance Index. In the index, countries are ranked according to their trade logistics "friendliness." The rankings, which are online here, are interesting, with Singapore and the Netherlands ranking at the top and Timor-Leste and Afghanistan at the bottom. (Given my own research, I noted that Burundi was somehow ranked considerably higher than Rwanda, which struck me as a bit odd. But weird things always happen in composite rankings.)

Perhaps more interesting are the considerations that the index inspires for comparative political economy folks. To the extent that developing countries' best shot at improving their lots is via trade, one is led to ask a series of questions:

• To what extent are choices---rather than fixed conditions like land-lockedness, terrain, or natural resource availability---responsible for such variation in domestic friendliness to trade?
  
• What kinds of choices matter most---private choices in the market or choices of governments? How are market and government choices interrelated in determining trade friendliness?

The index provides one outcome measure for a study on the variation in the trade infrastructure of a country. And it seems to me that the issue of whether market forces or governments are largely responsible for such differences is the question.

Thus, an interesting research program would be to explain what combinations of market and government forces result in more or less "trade friendly" environments. This fits in neatly with studies of public goods provision, but with a slightly different emphasis than many existing studies.

One way to start on such a study would be to choose a set of countries from different strata on the list, and examine their domestic trade infrastructure. Looking within country, one could randomly select elements from different strata of the trade infrastructure---e.g., elements of the transport infrastructure. From there, one could study whether such elements were the results of private provision, public provision, or some combination. Thinking about some instances in the U.S., for example, early railroad was the result of private provision, but the U.S. mail system was established by the government at the time of the U.S. republic's founding as a way to boost interstate trade. My home town, Chadds Ford, is named after a private ferry service operating across the Brandywine River in the pre-Revolutionary period. These are all contributions to the trade logistics environment of the country. A mapping exercise of this sort in a few countries would illuminate ways that new trading opportunities are created or seized, with important implications for the study of economic development. For us political scientists, there can be no doubt that distributional concerns and collective action problems have played their fair role in determining levels of provision.