Farther on down the Road: Transport Costs, Trade and Urban Growth in Sub-Saharan Africa

TLDR

The paper investigates how inter‑city transport costs shape the income of sub‑Saharan African cities. The study finds that a 2002–2008 oil price shock raises the income of port‑adjacent cities by about 7 % relative to cities 500 km away, implying a transport‑cost elasticity of –0.28 at that distance, and that the impact differs by road quality—paved routes amplify port‑cost effects while unpaved routes make cities more sensitive to secondary‑center linkages.

Abstract

This paper investigates the role of inter-city transport costs in determining the income of sub-Saharan African cities. In particular, focusing on fifteen countries whose largest city is a port, I find that an oil price increase of the magnitude experienced between 2002 and 2008 induces the income of cities near that port to increase by 7 percent relative to otherwise identical cities 500 kilometers farther away. Combined with external estimates, this implies an elasticity of city economic activity with respect to transport costs of -0.28 at 500 kilometers from the port. Moreover, the effect differs by the surface of roads between cities. Cities connected to the port by paved roads are chiefly affected by transport costs to the port, while cities connected to the port by unpaved roads are more affected by connections to secondary centers.