Trade Benefits of Transport Network Expansion Policy in Türkiye

Year 2023, , 1005 - 1027, 25.05.2023

Duygu Şahan , Okan Tuna

https://doi.org/10.25295/fsecon.1216970

Abstract

Over the past two decades, Türkiye has undertaken considerable investment in transport infrastructure to build a well-developed transport network and to get integrated into global supply chains. This study aims to evaluate long-term trade expansion benefits of transport network investment in Türkiye to derive recommendations for transport and industrial policy. For this purpose, gravity models of trade are estimated for exports and imports with infrastructure investments in various transport modes as the main explanatory variables; as well as other independent variables involving determinants of bilateral trade flow, Information and Communication Technology (ICT) development. In addition, control variables for Türkiye and for partner countries are involved in the models to obtain robust results. A main inference from the analysis entails that transport infrastructure investment acts as a driver for import growth rather than export expansion. As another important conclusion, transport infrastructure investment should be carried out with all transport types considered, based on a long-term transport policy scheme with special attention on road and rail infrastructure. Moreover, transport modes should be integrated to enhance network and connectivity of the overall logistics system. As a final remark, a widespread practice of multimodal and intermodal transportation can be achieved by a holistic integration policy of transport modes.

Keywords

International Logistics, Transport Infrastructure, Trade Development, Gravity Model, Transport Economics

References

• Ansar, A., Flyvbjerg, B., Budzier, A. & Lunn, D. (2016). Does Infrastructure Investment Lead to Economic Growth or Economic Fragility? Evidence from China. Oxford Review of Economic Policy, 32(3), 360-390.
• Badalyan, G., Herzfeld, T. & Rajcaniova, M. (2014). Transport Infrastructure and Economic Growth: Panel Data Approach for Armenia, Georgia and Turkey. Review of Agricultural and Applied Economics, 17(2), 22-31.
• Banister, D. & Berechman, Y. (2001). Transport Investment and The Promotion of Economic Growth. Journal of Transport Geography, 9, 209-218.
• Batley, R., Bates, J. Bliemer, M., Börjesson, M., Bourdon, J., Cabral, M. O., Chintakayala, P. K., Choudhury, C., Daly, A., Dekker, T., Drivyla, E., Fowkes, T., Hess, S., Heywood, C., Johnson, D., Laird, J., Mackie, P., Parkin, J., Sanders, S., Sheldon, R., Wardman, M. & Worsley, T. (2019). New Appraisal Values of Travel Time Saving and Reliability in Great Britain. Transportation, 46, 583-621. https://doi.org/10.1007/s11116-017-9798-7.
• Baum-Snow, N., Henderson, J. V., Turner, M. A., Zhang, Q. & Brandt, L. (2020). Does Investment in National Highways Help or Hurt Hinterland City Growth?. Journal of Urban Economics, 115, 103124.
• Bensassi, S., Márquez-Ramos, L., Martínez-Zarzoso, I. & Suárez-Burguet, C. (2015). Relationship Between Logistics Infrastructure and Trade: Evidence from Spanish Regional Exports. Transportation Research Part A: Policy and Practice, 72, 47-61.
• Berechman, J., Ozmen, D. & Ozbay, K. (2006). Empirical Analysis of Transportation Investment and Economic Development at State, County and Municipality Levels. Transportation, 33(6), 537-551.
• Bodur Gümüş, K. (2018). National and Regional Priority Transport Programs and Projects in Turkey. CAREC (Central Asia Regional Economic Cooperation Program) 17th Transport Sector Coordinationg Committeee (TSCC) Meeting. Istanbul, Turkey. 18-20 April 2018. https://www.carecprogram.org/uploads/TURrev_EN.pdf, (24.05.2021).
• Bottasso, A., Conti, M., de Sa Porto, P. C., Ferrari, C. & Tei, A. (2018). Port Infrastructures and Trade: Empirical Evidence from Brazil. Transportation Research Part A: Policy and Practice, 107, 126-139.
• Canning, D. & Pedroni, P. (2008). Infrastructure, Long-Run Economic Growth and Causality Tests for Cointegrated Panels. The Manchester School, 76, 504-527.
• Cantos, P., Gumbau-Albert, M. & Maudos, J. (2005). Transport Infrastructures, Spillover Effects and Regional Growth: Evidence of The Spanish Case. Transport Reviews, 25(1), 25-50.
• Chatman, D. G. & Noland, R. B. (2011). Do Public Transport Improvements Increase Agglomeration Economies? A Review of Literature and An Agenda for Research. Transport Reviews, 31(6), 725-742. Doi: 10.1080/01441647.2011.587908.
• Chen, Z. & Haynes, K.E. (2017). Impact Of High-Speed Rail on Regional Economic Disparity in China. Journal of Transport Geography, 65, 80-91.
• Cigu, E., Agheorghiesei, D. T. & Toader, E. (2019). Transport Infrastructure Development, Public Performance and Long-Run Economic Growth: A Case Study for the EU-28 Countries. Sustainability, 11(1), 67.
• Coşar, A. K. & Demir, B. (2016). Domestic Road Infrastructure and International Trade: Evidence from Turkey. Journal of Development Economics, 118, 232-244.
• Crescenzi, R. & Rodriguez-Pose, A. (2012). Infrastructure and Regional Growth in the European Union. Papers in Regional Science, 91(3), 487-513.
• Crescenzi, R., Di Cataldo, M. & Rodríguez-Pose, A. (2016). Government Quality and The Economic Returns of Transport Infrastructure Investment in European Regions. Journal of Regional Science, 56, 555-582.
• Deng, T. (2013). Impacts of Transport Infrastructure on Productivity and Economic Growth: Recent Advances and Research Challenges. Transport Reviews, 33(6), 686-699.
• Deng, T., Shao, S., Yang, L. & Zhang, X. (2014). Has The Transport-Led Economic Growth Effect Reached a Peak in China? A Panel Threshold Regression Approach. Transportation, 41, 567–587. https://doi.org/10.1007/s11116-013-9503-4.
• Diao, M. (2018). Does Growth Follow the Rail? The Potential Impact of High-Speed Rail on the Economic Geography of China. Transportation Research Part A: Policy and Practice, 113, 279-290.
• Ducruet, C., Ietri, D. & Rozenblat, C. (2011). Cities in Worldwide Air and Sea Flows: A Multiple Networks Analysis. Cybergeo: European Journal of Geography.
• Duranton, G. (2015). Roads and Trade in Colombia. Economics of Transportation, 4(1-2), 16- 36.
• Duranton, G., Morrow, P. M. & Turner, M.A. (2014). Roads and Trade: Evidence from the US. The Review of Economic Studies, 81(2), 681–724.
• Duranton, G. & Turner, M. A. (2012). Urban Growth and Transportation. The Review of Economic Studies, 79(4), 1407–1440. https://doi.org/10.1093/restud/rds010.
• Egger, P. & Staub, K. (2016). GLM Estimation of Trade Gravity Models with Fixed Effects. Empirical Economics, 50, 137–175.
• Fan, S. & Chan-Kang, C. (2005). Road Development, Economic Growth, and Poverty Reduction in China. Research Reports 138. International Food Policy Research Institute (IFPRI).
• Francois, J. & Manchin, M. (2013). Institutions, Infrastructure, and Trade. World Development, 46, 165-175.
• Fraumeni, B. M. (2009). The Contribution of Highways to GDP Growth. NBER Working Paper No. w14736. https://ssrn.com/abstract=1347219, (08.06.2021).
• Hasselgren, B. (2013). Government's Role for Transport Infrastructure: Theoretical Approaches and Historical Development. Doctoral Dissertation. Stockholm: KTH Royal Institute of Technology.
• He, S., Yu, S. & Wang, L. (2021). The Nexus of Transport Infrastructure and Economic Output in City-Level China: A Heterogeneous Panel Causality Analysis. The Annals of Regional Science, 66(1), 113-135.
• Keho, Y. & Echui, A. D. (2011). Transport Infrastructure Investment and Sustainable Economic Growth in Côte d'Ivoire: A Cointegration and Causality Analysis. Journal of Sustainable Development, 4(6), 23.
• Kuştepeli, Y., Gülcan, Y. & Akgüngör, S. (2012). Transportation Infrastructure Investment, Growth and International Trade in Turkey. Applied Economics, 44(20), 2619-2629. DOI: 10.1080/00036846.2011.566189.
• Kyriacou, A. P., Muinelo-Gallo, L. & Roca-Sagalés, O. (2019). The Efficiency of Transport Infrastructure Investment and The Role of Government Quality: An Empirical Analysis. Transport Policy, 74, 93-102.
• Laird, J. J. & Venables, A. J. (2017). Transport Investment and Economic Performance: A Framework for Project Appraisal. Transport Policy, 56, 1-11.
• Liang, Y., Zhou, K., Li, X., Zhou, Z., Sun, W. & Zeng, J. (2020). Effectiveness of High-Speed Railway on Regional Economic Growth for Less Developed Areas. Journal of Transport Geography, 82, 102621.
• Luo, X. & Xu, X. (2018). Infrastructure, Value Chains, and Economic Upgrades. Policy Research Working Paper, No. 8547. Washington DC: World Bank. https://openknowledge.worldbank.org/handle/10986/30237, (03.04.2019).
• Meersman, H. & Nazemzadeh, M. (2017). The Contribution of Transport Infrastructure to Economic Activity: The Case of Belgium. Case Studies on Transport Policy, 5(2), 316- 324.
• Metz, D. (2008). The Myth of Travel Time Saving. Transport Reviews, 28(3), 321-336. doi: 10.1080/01441640701642348.
• Mohmand, Y. T., Wang, A. & Saeed, A. (2017). The Impact of Transportation Infrastructure on Economic Growth: Empirical Evidence from Pakistan. Transportation Letters, 9(2), 63- 69.
• MoTI. (2019). Republic of Turkey Ministry of Transport and Infrastructure. Ulaşan ve erişen Türkiye 2019 [Reaching and accessing Türkiye 2019]. Ankara.
• OECD. (2023). Infrastructure Investment (indicator). doi: 10.1787/b06ce3ad-en (Accessed on 12 January 2023)
• Ozbay, K., Ozmen-Ertekin, D. & Berechman, J. (2007). Contribution of Transportation Investments to County Output. Transport Policy, 14(4), 317-329. https://doi.org/10.1016/j.tranpol.2007.03.004.
• Park, J. S., Seo, Y. J. & Ha, M. H. (2019). The Role of Maritime, Land, And Air Transportation in Economic Growth: Panel Evidence from OECD and Non-OECD Countries. Research in Transportation Economics, 78, 100765.
• Portugal-Perez, A. & Wilson, J. S. (2012). Export Performance and Trade Facilitation Reform: Hard and Soft Infrastructure. World Development, 40(7), 1295-1307.
• Pradhan, R. P. (2010). Modelling The Nexus Between Transport Infrastructure and Economic Growth in India. International Journal of Management and Decision Making, 11(2), 182-196.
• Pradhan, R. P. & Bagchi, T. P. (2013). Effect of Transportation Infrastructure on Economic Growth in India: The VECM Approach. Research in Transportation Economics, 38(1), 139-148.
• Saidi, S., Shahbaz, M. & Akhtar, P. (2018). The Long-Run Relationships Between Transport Energy Consumption, Transport Infrastructure and Economic Growth in MENA Countries. Transportation Research Part A: Policy and Practice, 111, 78-95.
• Salling, K. B. & Banister, D. (2009). Assessment of Large Transport Infrastructure Projects: The CBA-DK Model. Transportation Research Part A: Policy and Practice, 43, 800-813.
• Santos Silva, J. M. C. & Tenreyro, S. (2006). The Log of Gravity. The Review of Economics and Statistics, 88(4), 641-658.
• Tinbergen, J. (1962). Shaping The World Economy; Suggestions for an International Economic Policy. New York: Twentieth Century Fund.
• Turkstat. (2021). Foreign trade statistics. Foreign trade by special trade system. Foreign trade by mode of transport. https://data.tuik.gov.tr/Kategori/GetKategori?p=dis-ticaret104&dil=1.Ülengin, F., Özaydın, Ö., Ülengin, B., Kopp, A., Önsel, S., Kabak, Ö. and Aktaş.
• E. (2013). Are road transportation investments in line with demand projections? A Gravity-based analysis for Turkey. Transport Policy, 29, 227–235. DOI: 10.1016/j.tranpol.2013.07.002.
• Wang, C., Lim, M. K., Zhang, X., Zhao, L. & Lee, P. T. W. (2020). Railway and Road Infrastructure in the Belt and Road Initiative Countries: Estimating the Impact of Transport Infrastructure on Economic Growth. Transportation Research Part A: Policy and Practice, 134, 288-307.
• Wessel, J. (2019). Evaluating The Transport-Mode-Specific Trade Effects of Different Transport Infrastructure Types. Transport Policy, 78, 42-57.
• World Bank. (2019). PPP in Infrastructure. Country Snapshots - Turkey. World Bank, 2019a. PPP in infrastructure. https://ppi.worldbank.org/en/snapshots/rankings.