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Rail transport and firm productivity : evidence from Tanzania

Author

Listed:
  • Iimi,Atsushi
  • Humphreys,Richard Martin
  • Mchomvu,Yonas Eliesikia
  • Iimi,Atsushi
  • Humphreys,Richard Martin
  • Mchomvu,Yonas Eliesikia

Abstract

Railway transport generally has the advantage for large-volume, long-haul freight operations. Africa possesses significant railway assets. However, many rail lines are currently not operational because of the lack of maintenance. The paper recasts light on the impact of rail transportation on firm productivity, using micro data collected in Tanzania. To avoid the endogeneity problem, the instrumental variable technique is used to estimate the impact of rail transport. The paper shows that the overall impact of rail use on firm costs is significant despite that the rail unit rates are set lower when the shipping distance is longer. Rail transport is a cost-effective option for firms. However, the study finds that firms'inventory is costly. This is a disadvantage of using rail transport. Rail operations are unreliable, adding more inventory costs to firms. The implied elasticity of demand for transport services is estimated at -1.01 to -0.52, relatively high in absolute terms. This indicates the rail users'sensitivity to prices as well as severity of modal competition against truck transportation. The study also finds that firm location matters to the decision to use rail services. Proximity to rail infrastructure is important for firms to take advantage of rail benefits.

Suggested Citation

  • Iimi,Atsushi & Humphreys,Richard Martin & Mchomvu,Yonas Eliesikia & Iimi,Atsushi & Humphreys,Richard Martin & Mchomvu,Yonas Eliesikia, 2017. "Rail transport and firm productivity : evidence from Tanzania," Policy Research Working Paper Series 8173, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8173
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    Citations

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    Cited by:

    1. Christian Darko & Giovanni Occhiali & Enrico Vanino, 2021. "The Chinese are Here: Import Penetration and Firm Productivity in Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 57(12), pages 2112-2135, December.
    2. Darko, Christian K. & Occhiali, Giovanni & Vanino, Enrico, 2018. "The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa," ETA: Economic Theory and Applications 273142, Fondazione Eni Enrico Mattei (FEEM).
    3. Suchi Kapoor Malhotra & Howard White & Nina Ashley O. Dela Cruz & Ashrita Saran & John Eyers & Denny John & Ella Beveridge & Nina Blöndal, 2021. "Studies of the effectiveness of transport sector interventions in low‐ and middle‐income countries: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.

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