Rail Transport and Firm Productivity : Evidence from Tanzania
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...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/966401504009617940/Rail-transport-and-firm-productivity-evidence-from-Tanzania http://hdl.handle.net/10986/28348 |
| Summary: | 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. |
|---|