the challenges facing landlocked developing countries: a case study ...

EXECUTIVE SUMMARY
The Human Development Report 2002 (HDR) paints a stark picture for most of the
world’s landlocked countries. None of the non-European landlocked countries are
classified as “high human development;” thirteen landlocked countries are classified as
“low human development,” and nine of the world’s twelve least developed countries are
landlocked.
Although geographic location is just one of many factors contributing to economic and
human development, these summary indicators from the HDR highlight the difficult
situation faced by so many landlocked countries. The most obvious challenge landlocked
countries encounter relative to their maritime neighbors is that they lie farther from ports
and thus incur higher transport costs when trading with global markets. Higher trade costs
can reduce the welfare of a country’s citizens and impede prospects for economic growth
by rendering goods expensive to import and locally produced goods uncompetitive for
export. Lack of integration with external markets can also hinder growth by limiting
what Adam Smith first identified as the scope of the market, which enables specialization
in production and the efficient division of labor.
However, distance forms just one component of the costs of being landlocked. Another,
often more important, challenge of landlockedness lies in the dependence on neighbors
for access to international shipping routes. This reliance can take several forms. First, if
a transit neighbor, the country through which one must past to access a sea port, has not
invested in its infrastructure, then not only will the landlocked country’s face barriers to
trade and opportunities for growth, but it will also reap limited benefits to investments in
its own infrastructure. A second form of dependence is political. If a landlocked country
and its transit neighbor are in conflict, either military or diplomatic, the transit neighbor
can easily block borders or adopt other impediments to trade. A third form of dependence
is less direct but often equally costly. When neighbors suffer from civil war, transit
routes can often be damaged or closed, requiring rerouting of major trade corridors or, in
the worst case, stoppages of transit. A fourth category of dependence, administrative
barriers, often imposes the greatest burden. Crossing a border typically means passing
through customs, requiring long waits and additional paperwork. In some instances, it
also means transferring goods between modes of transport, perhaps because rail lines
change gauge width at a border or even stop altogether. In other instances, weak
administrative systems might lend themselves to corruption and bribe-payments as
necessary costs of business.
Given these multiple components of landlockedness, it would be misleading to generalize
about what it means for a country to be landlocked. Instead, one needs to consider
carefully how the problems of distance and dependence are interacting with a country’s
economic structure in order to understand how landlockedness is affecting that country’s
development processes. This report aims to provide such an overview for the world’s 30
least developed landlocked countries, as measured by HDI scores, through short case
studies that evaluate the extent to which each country’s transportation networks are able
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