Infrastructure in the light of trade theories: the role of transport costs

Abstract

There is some conviction that the costs of logistics and transport were not integrated into the economic question until the late 19th century. Nevertheless, several studies have revealed that the importance of transport was evident, so it would be interesting to highlight the starting point for the consideration of transport in trade.

The objective of this paper is to provide a critical review of the theoretical work governing the link between macroinfrastructure and trade. Our analysis of trade is informed by the limitations that have marked the neglect of space in the classical field of trade, looking at classical trade theories related to the notion of comparative advantage. This shortcoming has been the subject of much criticism by spatial economists. Subsequently, transport costs, which were somewhat neglected in classical trade theory, became the focus of new trade theories. This can be seen in the Samuelson model and in the advances of the new classical trade theory.

The results of our critical analysis have shown that the inclusion of transport costs has followed a gradual sequence that has eventually made transport costs a cornerstone of economic analysis, and that its omission will lead to results that escape reality.

Keywords: Transportation costs, Infrastructure, Trade

JEL Classification:  B17

Paper type: Theoretical Research