Economics

Beyond landlockedness: transit structure, infrastructure, and the geography of trade costs

Document Type

Article

Abstract

This paper examines how geographic disadvantage and infrastructure shape bilateral trade flows, with a particular focus on landlocked countries. Using a global panel dataset covering 2007–2019, the paper moves beyond the conventional binary classification of landlockedness by decomposing the geographic disadvantage into coastal accessibility and transit structure. The empirical strategy combines an augmented gravity model with the Hausman–Taylor estimator to address endogeneity while retaining time-invariant geographic variables, and is complemented by Poisson pseudo-maximum likelihood (PPML) estimation and extensive-margin analysis to account for zero trade flows, heteroskedasticity, and trade participation. The results yield three main findings. First, infrastructure plays a central role in facilitating trade, with improvements in logistics performance significantly increasing bilateral trade flows. Second, the negative effect of landlockedness is largely driven by coastal accessibility: once distance to the nearest coast is accounted for, the estimated penalty of being landlocked declines substantially. Third, and most importantly, the structure of transit access matters. Landlocked countries that depend on a single coastal neighbor experience significantly lower trade, highlighting the importance of competition among transit routes. The findings are robust across alternative estimators, including fixed effects, Hausman–Taylor, PPML, and extensive-margin models. These findings suggest that the disadvantages faced by landlocked countries are multidimensional, reflecting not only geography and infrastructure but also regional political economy. Policies aimed at improving trade integration should therefore focus on enhancing infrastructure, strengthening regional cooperation, and alleviating the trade costs associated with limited transit options © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2026.

Publication Title

International Economics and Economic Policy

Publication Date

2027

Volume

24

Issue

1

ISSN

1612-4804

DOI

10.1007/s10368-026-00817-5

Keywords

bilateral trade, geographic disadvantage, gravity model, Hausman–Taylor estimator, infrastructure, landlocked countries, trade costs, transit structure

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