Landlockedness and Economic Development: Analyzing Subnational Panel Data and Exploring Mechanisms

31 Pages Posted: 11 Jan 2018

See all articles by Michael Jetter

Michael Jetter

University of Western Australia - Dept. of Economics; Institute for Corruption Studies

Saskia Moesle

University of Bayreuth

David Stadelmann

University of Bayreuth - Faculty of Law, Business and Economics; CREMA

Date Written: November 16, 2017

Abstract

This paper revisits the hypothesis that landlocked regions are systematically poorer than regions with ocean access, using panel data for 1,527 subnational regions in 83 nations from 1950-2014. This data structure allows us to exploit within-country-time variation only (e.g., regional variation within France at one point in time), thereby controlling for a host of unobservables related to country-level particularities, such as a country's unique history, cultural attributes, or political institutions. Our results suggest lacking ocean access decreases regional GDP per capita by 10 - 13 percent. We then explore potential mechanisms and possible remedies. First, national political institutions appear to play a marginal role at best in the landlocked-income relationship. Second, the income gap between landlocked and non-landlocked regions within the same nation widens as i) GDP per capita rises, ii) international trade becomes more relevant for the nation, and iii) national production shifts to manufacturing. Finally, we find evidence consistent with the hypothesis that national infrastructure (i.e., transport-related infrastructure and rail lines) can alleviate the lagging behind of landlocked regions.

Keywords: landlockedness, geography, GDP per capita, trade openness, infrastructure

JEL Classification: F430, H540, O180, O400, R120

Suggested Citation

Jetter, Michael and Moesle, Saskia and Stadelmann, David, Landlockedness and Economic Development: Analyzing Subnational Panel Data and Exploring Mechanisms (November 16, 2017). CESifo Working Paper Series No. 6733. Available at SSRN: https://ssrn.com/abstract=3100019

Michael Jetter (Contact Author)

University of Western Australia - Dept. of Economics ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

Saskia Moesle

University of Bayreuth ( email )

Universitatsstr 30
Bayreuth, D-95447
Germany

David Stadelmann

University of Bayreuth - Faculty of Law, Business and Economics ( email )

Universitätsstraße 30
Bayreuth, 95447
Germany

CREMA ( email )

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

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