Evaluating the Impact of Improvements in Transport: The Case of Transport Corridors in Southern Africa Sandra Sequeira Harvard University August 31, 2006.

Evaluating the Impact of Evaluating the Impact of Improvements in Improvements in

Transport:Transport:

The Case of Transport Corridors The Case of Transport Corridors in Southern Africain Southern Africa

Sandra SequeiraSandra SequeiraHarvard UniversityHarvard UniversityAugust 31, 2006August 31, 2006

Outline of the DiscussionOutline of the Discussion

MotivationMotivation: : Nexus between Transport, Trade and GrowthNexus between Transport, Trade and Growth

Policy InterventionPolicy Intervention: : Rehabilitating Transport CorridorsRehabilitating Transport Corridors

Evaluation ProjectEvaluation Project::

– Goal: measure micro-level impact of changes in transport Goal: measure micro-level impact of changes in transport costscosts

– Primary and auxiliary evaluation questionsPrimary and auxiliary evaluation questions– The importance of a micro approachThe importance of a micro approach– Detailed research design: Detailed research design:

Empirical Strategy, Robustness of resultsEmpirical Strategy, Robustness of results– Implementation DetailsImplementation Details

Trade, Transport and GrowthTrade, Transport and Growth

Freight CostsFreight Costs FirmsFirms

TradeTrade

InvestmentInvestment

Congested PortsCongested PortsNon-performing RailNon-performing RailPoor maintenance of RoadsPoor maintenance of Roads

GROWTHGROWTH

Transport, Trade and Growth Transport, Trade and Growth (Cont)(Cont)

Hummels (1998), Venables (1999), Yeats (1996)Hummels (1998), Venables (1999), Yeats (1996)

– increasing importance of transport costs, especially for Sub increasing importance of transport costs, especially for Sub Saharan Africa (SSA)Saharan Africa (SSA)

– SSA:SSA: commodity based economies, high volume, low value commodity based economies, high volume, low value goodsgoods

long distances, several border postslong distances, several border posts accumulated neglect of primary transport networksaccumulated neglect of primary transport networks

Goal: Reduce costs of exporting raw materials and Goal: Reduce costs of exporting raw materials and importing inputs and final goodsimporting inputs and final goods

TRADE-LED TRADE-LED GROWTHGROWTH

Policy Goals: Guiding the Policy Goals: Guiding the Transport Infrastructure ShockTransport Infrastructure Shock

Important to understand:Important to understand:

– Extent, Determinants and Impact of transport Extent, Determinants and Impact of transport PoliciesPolicies

– Impact of transport costs on firmsImpact of transport costs on firms

Motivating questions:Motivating questions:

““DDo investments in transport infrastructure reduce o investments in transport infrastructure reduce transport costs for firms? transport costs for firms?

To what extent and how do transport costs affect firm To what extent and how do transport costs affect firm productivity, profits, employment generation and productivity, profits, employment generation and export propensity?”export propensity?”

Policy Intervention: What, Where, Why?Policy Intervention: What, Where, Why?

ProjectProject: Evaluation of Transport : Evaluation of Transport Improvements in South Africa and Improvements in South Africa and MozambiqueMozambique

WhyWhy? High impact area due to: ? High impact area due to: High overland transport costsHigh overland transport costs Long distances to portsLong distances to ports Commodity based economiesCommodity based economies

Geographic FocusGeographic Focus

South AfricaSouth Africa

– Important industrial, mining and agricultural Important industrial, mining and agricultural region far from the coast (600 - 1,200 km)region far from the coast (600 - 1,200 km)

– Current accelerating growth strategy Current accelerating growth strategy constrained by transport (Eg: Import Parity constrained by transport (Eg: Import Parity Pricing, Limited Response to Asian Pricing, Limited Response to Asian Commodity Boom)Commodity Boom)

– Acute sense of importance of transport, 15-Acute sense of importance of transport, 15-20% of GDP equivalence20% of GDP equivalence

Geographic Focus (cont)Geographic Focus (cont)

MozambiqueMozambique

– Third lowest road and railway densities in Third lowest road and railway densities in Southern and Eastern Africa Southern and Eastern Africa

– Acute sense of importance of transport Acute sense of importance of transport (product based studies: 60, 80% of (product based studies: 60, 80% of product value)product value)

– Historically a transport economy serving a Historically a transport economy serving a strong hinterland (South Africa, Zimbabwe, strong hinterland (South Africa, Zimbabwe, Malawi, Zambia, Botswana, Swaziland)Malawi, Zambia, Botswana, Swaziland)

Policy Intervention to be Policy Intervention to be EvaluatedEvaluated

Promotion of Spatial Development Initiatives (SDIs)Promotion of Spatial Development Initiatives (SDIs)

– GoalGoal: : stimulate growth, trade and investment along key stimulate growth, trade and investment along key international transport corridorsinternational transport corridors

– StrategyStrategy: : bilateral agreements that identified cluster cross-bilateral agreements that identified cluster cross-sectoral investment opportunities for PPPs. Transport: the sectoral investment opportunities for PPPs. Transport: the promotion of PPPs based on matching users to infrastructure promotion of PPPs based on matching users to infrastructure providersproviders

– Target RegionsTarget Regions:: key transnational transport corridorskey transnational transport corridors

– Expected OutcomesExpected Outcomes:: virtuous cycle of expanding regional virtuous cycle of expanding regional markets, increased regional integration, a regional approach to markets, increased regional integration, a regional approach to FDI, job creation, Small and Medium Size Enterprise (SMMEs) FDI, job creation, Small and Medium Size Enterprise (SMMEs) development, strengthened planning and managing capacity of development, strengthened planning and managing capacity of local governments and rapid economic growth.local governments and rapid economic growth.

SDIs in Southern and Eastern SDIs in Southern and Eastern AfricaAfrica

Focus of the Evaluation ProjectFocus of the Evaluation Project

Maputo Development Corridor (MDC) consists ofMaputo Development Corridor (MDC) consists of::– Gauteng-Maputo toll road (2001)Gauteng-Maputo toll road (2001)– Private Port of Maputo (2004)Private Port of Maputo (2004)– Wittbank-Ressano Garcia Rail line (operational by the end of Wittbank-Ressano Garcia Rail line (operational by the end of

2006)2006)

Why focus on the Rehabilitation of the Gauteng-Ressano Why focus on the Rehabilitation of the Gauteng-Ressano Garcia Rail Link:Garcia Rail Link:

i.i. Rail volumes guarantee Rail volumes guarantee ship calls at the port and justify regular ship calls at the port and justify regular dredgingdredging

ii.ii. Technological developments and containerization broadened the Technological developments and containerization broadened the range of rail-friendly cargo, also rail relative cost-effectiveness. Allows range of rail-friendly cargo, also rail relative cost-effectiveness. Allows for measurement of cross-industry and cross-firm effectsfor measurement of cross-industry and cross-firm effects

iii.iii. Development Debate Redux:Development Debate Redux: role of rail in development and role of rail in development and growth (Rostow, Fogel, Fishlow, etc): measuring the magnitude of the growth (Rostow, Fogel, Fishlow, etc): measuring the magnitude of the reduction in transportation costs associated with rail, who benefits, what reduction in transportation costs associated with rail, who benefits, what are the effects on trade, structure of regional output, rise in per capita are the effects on trade, structure of regional output, rise in per capita income, etc.income, etc.

Goal of Evaluation ProjectGoal of Evaluation Project

Empirical investigation aims to:

i. i. Measure the impact of changes in transport on firm Measure the impact of changes in transport on firm behavior, investment and growth. behavior, investment and growth.

ii. ii. Measure the interaction between transportMeasure the interaction between transport modes and transport corridorsmodes and transport corridors

iii. iii. Contribute to the broader cost-benefit analysis Contribute to the broader cost-benefit analysis on the cost-effectiveness of investments in on the cost-effectiveness of investments in transport transport

Evaluation QuestionsEvaluation Questions

Primary evaluation questions:Primary evaluation questions:

i. i. Does introducing Does introducing competitioncompetition between between transport corridors increase efficiency in the transport corridors increase efficiency in the transport system and reduce transport costs transport system and reduce transport costs for firms?for firms?

ii.ii. Do reductions in transport costs promote Do reductions in transport costs promote regional growth through improved trade and regional growth through improved trade and investment opportunities?investment opportunities?

Evaluation Questions (cont.)Evaluation Questions (cont.)

Auxiliary questions:Auxiliary questions:

a. Transport Analysis:a. Transport Analysis:

i. i. Are investments in rail and road complements or substitutes?Are investments in rail and road complements or substitutes? ii. ii. What is the nature and magnitude of spillover or network What is the nature and magnitude of spillover or network

effectseffects across transport modes and transport corridors?across transport modes and transport corridors?

b. Firm-level Analysis: b. Firm-level Analysis:

i. i. Do investments in infrastructure translate into uniform Do investments in infrastructure translate into uniform reductionsreductions

in unit transport costs for all commodities and firms?in unit transport costs for all commodities and firms?ii. ii. Do changes in transport costs affect firm dynamics regardingDo changes in transport costs affect firm dynamics regarding investment patterns, export behavior, factor productivity and investment patterns, export behavior, factor productivity and

patterns of entry and exit from the market?patterns of entry and exit from the market? iii. iii. Is there variation on firms' responses to changes in transport Is there variation on firms' responses to changes in transport

costs?costs?

Evaluation Questions (cont.)Evaluation Questions (cont.)

c. Growth Analysis:c. Growth Analysis:

i. Through which mechanisms do investments in i. Through which mechanisms do investments in transport infrastructure affect firms' productivity, transport infrastructure affect firms' productivity,

investment and growth? investment and growth?

ii. Are investments in transport infrastructure a cost-ii. Are investments in transport infrastructure a cost- effective and sustainable strategy to promoteeffective and sustainable strategy to promote growth? growth?

iii. Do SDIs cause convergence or divergence withiii. Do SDIs cause convergence or divergence with other non-targeted regions?other non-targeted regions?

iv. Are the benefits commensurate with the costs? iv. Are the benefits commensurate with the costs? What areWhat are

the social and economic rates of return to the social and economic rates of return to investments ininvestments in

transport?transport?

Innovative Research DesignInnovative Research Design

Policy Relevance:Policy Relevance:

a. Learning potential for future SDIs: a. Learning potential for future SDIs: Policy Cascade throughPolicy Cascade through NEPAD NEPAD

b. The importance of micro-data: b. The importance of micro-data:

1. 1. UnderstandingUnderstanding distributional effects of transport investments distributional effects of transport investments leads to a more targeted leads to a more targeted demand-driven transport policy demand-driven transport policy

2. Matching effects to different elements of transport 2. Matching effects to different elements of transport corridor (rail, road, ports)corridor (rail, road, ports)

3.3. Survey methodologySurvey methodology allows us to get at micro effects that allows us to get at micro effects that escape macro evaluations concerning types of investment in escape macro evaluations concerning types of investment in transport: eg. trade off between transport time and cost for transport: eg. trade off between transport time and cost for different firms and industries different firms and industries

Innovative Research Design Innovative Research Design (cont.)(cont.)c. c. New approach to impact evaluation of transport New approach to impact evaluation of transport

infrastructure: infrastructure:

Existing studies on transport infrastructure are based on: Existing studies on transport infrastructure are based on:

1) 1) ex anteex ante cost benefit analyses cost benefit analyses2) aggregate inferences based on crude country level2) aggregate inferences based on crude country level

measurements of port efficiency, road density measurements of port efficiency, road density and and

length of railways and their impact on trade,length of railways and their impact on trade, investment and growth. investment and growth.

Before and After analysis of distributional effects Before and After analysis of distributional effects allows us to get at:allows us to get at: Who benefited? By how much? Can Who benefited? By how much? Can we accurately measure the impact on trade, on we accurately measure the impact on trade, on employment, investment and growth? employment, investment and growth?

Detailed Research DesignDetailed Research DesignIndicatorsIndicators

I.I. Estimating the Estimating the Effect of Effect of Competition in Competition in the Transport the Transport SystemSystem

Secondary Data Secondary Data Collection along Collection along

targeted and targeted and alternative corridorsalternative corridors

Traffic Traffic Road, Rail, Port (Cabotage Road, Rail, Port (Cabotage and International)and International)

SourcesSources: ANE, CFM, MPDC, : ANE, CFM, MPDC, CdM, CDN, Portnet, Stats CdM, CDN, Portnet, Stats SA, NPA, SANRALSA, NPA, SANRAL

Transit Transit TimeTime

Road, Rail, PortRoad, Rail, Port

SourcesSources: Main Survey, CFM, : Main Survey, CFM, ANE, MPDC, CdM, CDN, ANE, MPDC, CdM, CDN, Maputo Corridor Logistics Maputo Corridor Logistics Initiative (MCLI), SANRALInitiative (MCLI), SANRAL

CostCost Road Hauliers, Rail, PortRoad Hauliers, Rail, Port

SourcesSources: Road Hauliers : Road Hauliers (see Annex I), CFM, MPDC, (see Annex I), CFM, MPDC, CdM, CDN, Development CdM, CDN, Development Bank of South Africa Bank of South Africa (DBSA), Road Freight (DBSA), Road Freight Association of SAAssociation of SA

SafetySafety Road accidents, Rail Road accidents, Rail DerailmentsDerailments

SourcesSources: INE, CFM, ANE, : INE, CFM, ANE, Ministry of Transport in Ministry of Transport in both countriesboth countries

II. II. Estimating the effect of transport Estimating the effect of transport corridors on growth and development:corridors on growth and development: (Secondary Data Collection (Secondary Data Collection

on treated and control regions)on treated and control regions)

IndicatorsIndicators

GrowthGrowth GDP per capitaGDP per capita

Annual average growth ratesAnnual average growth rates

Annual sectoral growth rates (mining, agriculture, tourism, Annual sectoral growth rates (mining, agriculture, tourism, manufacturing) and competitivenessmanufacturing) and competitiveness

Levels of Industry concentration (inverted Herfindhal)Levels of Industry concentration (inverted Herfindhal)

Source:Source: STATS, SA, INE, Banco de Moçambique STATS, SA, INE, Banco de Moçambique

InvestmentInvestment New sectoral investmentsNew sectoral investments

Total investmentsTotal investments

Foreign and Domestic Investment, aggregate and sectoralForeign and Domestic Investment, aggregate and sectoral

SourceSource: STATS SA, TIPS and Ministerial data from Trade and : STATS SA, TIPS and Ministerial data from Trade and Industry, Tourism, Transport and Agriculture, CPI and Industry, Tourism, Transport and Agriculture, CPI and Ministerial data from Trade and Industry, Tourism, Transport Ministerial data from Trade and Industry, Tourism, Transport and Agricultureand Agriculture

SMME SMME

developmedevelopmentnt

Number of new SMEsNumber of new SMEs

Turnover of SMEsTurnover of SMEs

Competitiveness, job creation, diversification, export Competitiveness, job creation, diversification, export propensity propensity

Source:Source: TIPS, INE TIPS, INE

II. II. Estimating the effect of transport Estimating the effect of transport corridors on growth and development corridors on growth and development (cont.)(cont.) (Secondary Data Collection (Secondary Data Collection

on treated and control regions)on treated and control regions)

IndicatorsIndicators

EmploymentEmployment Employment and labor force Employment and labor force participationparticipation

MigrationMigration

Annual sectoral employment growthAnnual sectoral employment growth

Source:Source: STATS SA STATS SA

InfrastructureInfrastructure Number of households with access Number of households with access to water and sanitation, energy and to water and sanitation, energy and telecommunicationstelecommunications

SourceSource: World Bank : World Bank

Health and Health and EducationEducation

HIV and Malaria prevalenceHIV and Malaria prevalence

Primary School attendance Primary School attendance

Access to Primary SchoolsAccess to Primary Schools

SourceSource: Demographic and Health : Demographic and Health Surveys (1997, 2003), Ministry of Surveys (1997, 2003), Ministry of Health and Ministry of Education Health and Ministry of Education

III. Estimating the Effect of Transport III. Estimating the Effect of Transport Costs Costs

on Industries and Firms:on Industries and Firms:

(Primary Data Collection)(Primary Data Collection)

Empirical Strategy:Empirical Strategy: i. i. Population of InterestPopulation of Interest

ii. Sampling Criteriaii. Sampling Criteria

iii. Survey Output and Indicatorsiii. Survey Output and Indicators

iv. Robustness Testsiv. Robustness Tests

v. Implementationv. Implementation

Empirical StrategyEmpirical Strategy

i. Cross Sectoral Firm Level Surveyi. Cross Sectoral Firm Level Survey

Geographic Location:Geographic Location:

i. i. Treatment regionsTreatment regions of Mpumalanga, Limpopo of Mpumalanga, Limpopo and Northeastern Gauteng in South Africa;and Northeastern Gauteng in South Africa;

Maputo, Southern Gaza and Southern Inhambane inMaputo, Southern Gaza and Southern Inhambane in Mozambique; Mozambique;

ii. ii. Control regionsControl regions of Southern Gauteng, Kwazulu of Southern Gauteng, Kwazulu Natal, Western and Eastern Cape in South Africa Natal, Western and Eastern Cape in South Africa

and and the Mozambican provinces of Northern Inhambane,the Mozambican provinces of Northern Inhambane, Sofala, Manica, Nampula, Niassa and ZambéziaSofala, Manica, Nampula, Niassa and Zambézia

Empirical Strategy (cont.)Empirical Strategy (cont.)

ii. Sampling Criteria:ii. Sampling Criteria:

– 800 firms800 firms in South Africa and Mozambique in South Africa and Mozambique– Cross section of industries:Cross section of industries: Mining, Mining,

Manufacturing, Retail, Tourism and Agribusiness. Manufacturing, Retail, Tourism and Agribusiness. – Stratified Random SamplingStratified Random Sampling determined by determined by

industry, location and firm size industry, location and firm size

Empirical Strategy (cont.)Empirical Strategy (cont.)

Treatment and control groups will be matched by Treatment and control groups will be matched by propensity scorespropensity scores based on a vector of firm and based on a vector of firm and industry level characteristics. industry level characteristics.

iii.iii. Survey output:Survey output:Firm-level organizational, financial, transport and Firm-level organizational, financial, transport and performance indicatorsperformance indicators

Chief indicators:Chief indicators: Profits, Factor Productivity, Profits, Factor Productivity, Investment and Risk, Export propensity, Inputs, Investment and Risk, Export propensity, Inputs, Sales, Output mix. Sales, Output mix.

iv. Robustness Testsiv. Robustness Tests

I. Durban and Maputo: I. Durban and Maputo: de factode facto alternatives or complements? alternatives or complements?

Is Maputo a real choice?Is Maputo a real choice?

Comparability of port technologies, cost Comparability of port technologies, cost and productivityand productivity

– DepthDepth– ProductivityProductivity– Storage CapacityStorage Capacity– Distances and CostDistances and Cost– SafetySafety

Durban Quay Lengths and DepthsDurban Quay Lengths and Depths

Location Range of lengths (m)

Range of depths (m)

Point 183-346 7.0-12.2 Maydon Wharf 26-275 6.1-10.6 Pier 1 213-351 9.1-12.8 Pier 2 216-305 12.8 Island View 165-245 10.6-12.8 Bluff 148-238 9.1-10.6 Source: KwaZulu-Natal Freight Transport Data Bank

Maputo Port Berth Lengths and Depths

Terminal Quay

length (m)

Alongside depth

(m) Maputo Containers 300 10.3 Citrus 380 11.0 Bulk sugar 170 10.5 Molasses 179 10.5 Bagged sugar

200 10.5

Coastal 300 8.0 Matola Grain 210 9.5 Aluminium 210 11.5 Petroleum 230 10.5 Coal 205 10.5

Durban vs Maputo (cont)Durban vs Maputo (cont)

Productivity and Growth PotentialProductivity and Growth Potential::

Berth Occupancy: 30% MaputoBerth Occupancy: 30% Maputo 100% Durban100% Durban

Crane Moves per hour: 15 TEU in bothCrane Moves per hour: 15 TEU in both

SafetySafety: : Maputo was first African certified ISPS portMaputo was first African certified ISPS port

Storage CapacityStorage Capacity::

more in Durban but limited expansion, 3 days free more in Durban but limited expansion, 3 days free storagestorage

less in Maputo but more potential for expansion, less in Maputo but more potential for expansion, offering 21 days free storageoffering 21 days free storage

Road and Rail Distances Road and Rail Distances (km)(km)

  Johannesburg

Middleburg

Polokwane

Phalaborwa

Lydenburg

Belfast Wittbank

Maputo Road 586 417 605 425 330 326 459

Rail 584 407 550 374 443   437

Durban Road 578 640 897 910 700 690 655

Rail 720 820 1,05 1,083 856   801

Road and Rail CostsRoad and Rail Costs

Road costs:Road costs: Durban cheaper, more backhauling Durban cheaper, more backhauling Rail costs:Rail costs: Maputo cheaper Maputo cheaper Port ChargesPort Charges: Maputo cheaper: Maputo cheaper

Unit: Rands per 20 ft containerUnit: Rands per 20 ft container

EXPORTEXPORT

OverlandOverland PortPortChargesCharges

Total RoadTotal Road Total RailTotal Rail

RoadRoad RailRail DaysDays CostCost DaysDays CostCost

Maputo vs Maputo vs DurbanDurban

45004500 -597-597 -659-659 -1-1 39293929 -2-2 -1168-1168

IMPORTIMPORT                     

Maputo vs Maputo vs DurbanDurban

500500 -597-597 -598-598 -1-1 -11-11 -2-2 -1108-1108

Historical Legacies- Historical Legacies- – Path-Dependence of Route Choice? NoPath-Dependence of Route Choice? No

– In the past, ships would flip from Durban to Maputo In the past, ships would flip from Durban to Maputo depending depending on how many days delay. 45% of SA cargo in 1975 was going on how many days delay. 45% of SA cargo in 1975 was going through Maputo. through Maputo.

– Most firms willing to undergo short-term relocation costs even if Most firms willing to undergo short-term relocation costs even if small cost savings per ton kmsmall cost savings per ton km

– Common Practice of “Hedging” between PortsCommon Practice of “Hedging” between Ports

The “Curse” of the Hub and Spoke Model?The “Curse” of the Hub and Spoke Model?– No clear consensus on the direction of the shipping industryNo clear consensus on the direction of the shipping industry– Economies of flow from consolidation in hubs versus higher Economies of flow from consolidation in hubs versus higher

timing and inventory coststiming and inventory costs– A system of more loops with smaller vessels bears less risk and A system of more loops with smaller vessels bears less risk and

could eventually turn out to be a cheaper option than running could eventually turn out to be a cheaper option than running very large vessels on few loops. Most likely that both business very large vessels on few loops. Most likely that both business models will prevail.models will prevail.

Nature and Expected Impact Nature and Expected Impact of the Intervention?of the Intervention?

Prior to the Intervention….expect changePrior to the Intervention….expect change

• 0,0

• 500,0

• 1.000,0

• 1.500,0

• 2.000,0

• 2.500,0

• 3.000,0

• 1975 • 1980 • 1985 • 1900 • 1995 • 2000 • 2004

• Rail Transport along the MDC

• National• International • Total•10

^3

TO

N. L

IQ

Expected Impact of the InterventionExpected Impact of the Intervention

MINERALS,

CEMENT,

GRANITE,

FERRO-ALLOYS,

MANUFACTURED

GOODS

CHEMICALS

COAL,

MINERALS,

STEEL,

FERRO-ALLOYS,

MANUFACTURE

D GOODS

FERRO-

ALLOYS

FOREST

PRODUCTS

COAL

Pretoria, vehicles and commodities

VEHICLES & COMPONENTS,

MANUFACTURED GOODS CITRUS, SOFT FRUIT,

FOREST PRODUCTS

CITRUS, SOFT FRUIT,

SUGAR, MINERALS,

ALLOYS,

CHEMICALS,

FOREST PRODUCTS

SUGAR, BANANAS,

FOREST PRODUCTS

(SWAZILAND)

SUGAR, CITRUS,

MINERALS, FOREST

PRODUCTS

JOHANNESBURG

MANUFACTURED

GOODS,

STEEL FINISHED

PRODUCTS

GRANITE,

PULP

phalaborwa mine

PHOSPHATE, COPPER,

MAGNETITE

Potential Growth of Port Throughput with RailPotential Growth of Port Throughput with Rail

ProductsProducts DirectionDirection Existing Capacity Existing Capacity

(tonnage (tonnage thousand)thousand)

Full Full CapacityCapacity

(ton. (ton. thous)thous)

ContainersContainers Import and Import and ExportExport

33 100100

CitrusCitrus ExportExport 00 100100

Coal&OresCoal&Ores ExportExport 1,3001,300 2,5002,500

MagnetiteMagnetite ExportExport 5,0005,000

GrainGrain ImportImport 00 203203

SaltSalt ImportImport 00 250250

FertilizerFertilizer ImportImport 00 6060

Comparability of Treated and Control Comparability of Treated and Control Areas?Areas?

I- I- Variation on Geographic Location of Variation on Geographic Location of ProductionProduction Sugar growing areas Sugar growing areas in South Africa arein South Africa are located onlocated on the the

coastal strip and hinterland around Durban as well as on the coastal strip and hinterland around Durban as well as on the area east of Nelspruit, along the Maputo corridor. In area east of Nelspruit, along the Maputo corridor. In Mozambique sugar grows in central provinces. Each of these Mozambique sugar grows in central provinces. Each of these areas is naturally placed in the catchment area of different areas is naturally placed in the catchment area of different corridors.corridors.

FruitFruit: Western and Eastern Cape, Nelspruit, Mpumalanga, : Western and Eastern Cape, Nelspruit, Mpumalanga, Limpopo, NampulaLimpopo, Nampula

RetailRetail: Gauteng, Western Cape, Durban, Maputo, Nampula: Gauteng, Western Cape, Durban, Maputo, Nampula

CashewsCashews: Central, Southern and Northern Mozambique: Central, Southern and Northern Mozambique

Car Manufactures:Car Manufactures: Eastern Cape, Pretoria, Durban Eastern Cape, Pretoria, Durban

MiningMining

MiningMining

Provincial Share of Total Mining GDP, 2001

Mpumalanga; 19%

Gauteng; 14%

NorthWest; 23%

Limpopo; 2%

Northern Cape; 10%

Free State; 9%

Kwazulu Natal; 4%

Mpumalanga

Gauteng

NorthWest

Limpopo

Northern Cape

Free State

Kwazulu Natal

II-II- Variation on Firm SizeVariation on Firm Size

Robustness Tests (cont.)Robustness Tests (cont.)

Spurious Effect: Asymmetric Information? Spurious Effect: Asymmetric Information?

What drives the choice to ship through Maputo: Cost or What drives the choice to ship through Maputo: Cost or information? Encouragement Design through MCLI (Maputo information? Encouragement Design through MCLI (Maputo Corridor Logistics Initiative)Corridor Logistics Initiative)

Time HorizonTime Horizon: : short enough to avoid confounding effects, short enough to avoid confounding effects, long enough to see a difference. long enough to see a difference.

Preliminary qualitativePreliminary qualitative research: 8 monthsresearch: 8 months

Search for natural discontinuities based on:Search for natural discontinuities based on:

a. a. Geographic locationGeographic locationb. b. Product characteristicsProduct characteristics

v. Implementationv. Implementation

Research Partners: Research Partners:

– Witts University,Witts University, SA- SA- Centre for Applied African Centre for Applied African Micro-Economic ResearchMicro-Economic Research (CAAMER), Economics (CAAMER), Economics DepartmentDepartment

School of Development Studies, University of Kwazulu School of Development Studies, University of Kwazulu Natal, University of Cape TownNatal, University of Cape Town

– Universidade Eduardo MondlaneUniversidade Eduardo Mondlane Universidade Católica da BeiraUniversidade Católica da Beira

– Stats SA, CSIR, INEStats SA, CSIR, INE

v. Implementation (cont.)v. Implementation (cont.)

Advantages of University partnerAdvantages of University partner::

- more cost effective- more cost effective- better use of local knowledge- better use of local knowledge- better acceptance of the surveying exercisebetter acceptance of the surveying exercise due to higher credibility (problem of “due to higher credibility (problem of “Survey Survey

Fatigue and Mistrust”Fatigue and Mistrust”))- higher returns to knowledge generation- higher returns to knowledge generation- promoting applied policy research at promoting applied policy research at

Universities (capacity building)Universities (capacity building)- incentives for sustainable ongoing data incentives for sustainable ongoing data

collectioncollection

Tentative Implementation Tentative Implementation ScheduleSchedule

Late September 2006Late September 2006 Selection of survey teams, Selection of survey teams, Piloting of survey instrumentsPiloting of survey instruments

October 2006October 2006 Baseline data collectionBaseline data collection

Late November 2006Late November 2006 Intermediate reports based on Intermediate reports based on the baseline datathe baseline data

September 2007September 2007 Follow-up surveyFollow-up survey

November 2007November 2007 Draft reportsDraft reports

December 2007December 2007 Dissemination of ResultsDissemination of Results

Annex I- Trucking IndustryAnnex I- Trucking Industry

Proposed Project: Proposed Project: Expansion of the Trucking Survey Expansion of the Trucking Survey currently underway in 6 African countries to South Africa and currently underway in 6 African countries to South Africa and MozambiqueMozambique

– GoalGoal: Measure the Impact of Investments in Rail : Measure the Impact of Investments in Rail Infrastructure on the Trucking IndustryInfrastructure on the Trucking Industry

– MethodologyMethodology: before and after survey to a sample of 20 : before and after survey to a sample of 20 formal firms (PPS) and 30 owner truckers in each countryformal firms (PPS) and 30 owner truckers in each country

– Primary Evaluation Question: Primary Evaluation Question: Do investments in rail infrastructure affect:Do investments in rail infrastructure affect:

– i. i. The structure of the trucking industry?The structure of the trucking industry?– ii.ii. The cost of trucking services? The cost of trucking services?– iii.iii. Employment in the trucking industry? Employment in the trucking industry?

Survey DataSurvey Data

Ownership characteristicsOwnership characteristics Indicators of firm productivityIndicators of firm productivity Percentage of backhaul tripsPercentage of backhaul trips Load factor (ratio of actual load to capacity onLoad factor (ratio of actual load to capacity on loaded trips)loaded trips) Level of competition in the trucking industry Level of competition in the trucking industry Exposure to corruptionExposure to corruption Exposure to overloading fines and choice of Exposure to overloading fines and choice of

transport routestransport routes Average number of hours drivenAverage number of hours driven Major constraints for growth and formalizationMajor constraints for growth and formalization Nature of interactions with the formal sectorNature of interactions with the formal sector

ANNEX-IIANNEX-II

Beira Corridor:Beira Corridor:

– Key Transport Infrastructure:Key Transport Infrastructure:

RailRail: : a)a) Sena lineSena line connecting to Tete, including spur lines to the Moatize connecting to Tete, including spur lines to the Moatize coal mines and to the Malawian border (600 km) coal mines and to the Malawian border (600 km)

b)b) MachipandaMachipanda line connecting to the Zimbabwean border (300 line connecting to the Zimbabwean border (300 km). km).

Repairs and maintenance concessioned to the Beira Railroad Company Repairs and maintenance concessioned to the Beira Railroad Company (CCFB), a consortium dominated by the Indian Rites and Ircon (CCFB), a consortium dominated by the Indian Rites and Ircon International who also own the 25 year lease over the Machipanda line International who also own the 25 year lease over the Machipanda line since 2004.since 2004.

Port of BeiraPort of Beira concessioned in 1998 to Cornelder Mozambique. concessioned in 1998 to Cornelder Mozambique. Undergoing significant changeUndergoing significant change

– Main Problems:Main Problems: Dredging of port, delays with rail, Zimbabwe’s economic Dredging of port, delays with rail, Zimbabwe’s economic collapse collapse

– Potential growth:Potential growth: vast Moatize hard coking coal deposits in Tete Province vast Moatize hard coking coal deposits in Tete Province as well as mineral agri/fisheries, tourism, cotton and sugar industries along as well as mineral agri/fisheries, tourism, cotton and sugar industries along the Zambezi valley.the Zambezi valley.

Beira CorridorBeira Corridor

Nacala CorridorNacala Corridor

Key Transport Infrastructure:Key Transport Infrastructure:

– Port of NacalaPort of Nacala concessioned in 2005 to Corredor Desenvolvimento de concessioned in 2005 to Corredor Desenvolvimento de Nacala (CDN)- consortium between Central East African Railways CEAR, Nacala (CDN)- consortium between Central East African Railways CEAR, Edlow Resources and Railroad Development CorporationEdlow Resources and Railroad Development Corporation

– Rail :Rail : Nacala-Lichinga, Nacala-Malawi Nacala-Lichinga, Nacala-Malawi

Major Problems: unstable concession of port and rail, significant Major Problems: unstable concession of port and rail, significant delays in thedelays in the

rehabilitation of the port and the major rail linesrehabilitation of the port and the major rail lines

Potential for Growth: Capture significant cargo from Malawi andPotential for Growth: Capture significant cargo from Malawi and Zambia, CDN hold enormous potential inZambia, CDN hold enormous potential in

agriculture, forestry and fisheries, mining agriculture, forestry and fisheries, mining and and tourism development. tourism development.

Nacala CorridorNacala Corridor

Nacala Line Forecast Nacala Line Forecast ((thousand tons)thousand tons)

CommodityCommodity Loading (l)/ unloading (u) pointLoading (l)/ unloading (u) point 20052005 20102010

         LowerLower UpperUpper

ContainersContainers Blantyre (u)Blantyre (u)    3030 5050

ContainersContainers Lilongwe (u)Lilongwe (u)   

CerealsCereals Blantyre (u)Blantyre (u) 1010 2020 3030

CerealsCereals Lilongwe (u)Lilongwe (u)   

FertiliserFertiliser Lilongwe (u)Lilongwe (u) 4040 7070 8080

FuelFuel Lilongwe (u)Lilongwe (u) 2020 4040 6060

SugarSugar Limbe (l)Limbe (l) 5050 8080 100100

OthersOthers Cuamba (u)Cuamba (u) 3030 4040 6060

OthersOthers Cuamba (l)Cuamba (l) 2020 3030 5050

OthersOthers Lilongwe (u)Lilongwe (u) 7070 9090 100100

OthersOthers Lilongwe (l)Lilongwe (l) 4040 5050 7070

TotalTotal    280280 450450 600600

Machipanda Line Forecast Machipanda Line Forecast (Thousand Tons)(Thousand Tons)

SectionSection CommodityCommodity 20102010

DomesticDomestic AllAll 218218

ExportExport GraniteGranite 176176

ExportExport FerrochromeFerrochrome 156156

ExportExport SteelSteel 128128

ExportExport ContainerContainer 179179

ExportExport MiscellaneousMiscellaneous 138138

ImportImport FertiliserFertiliser 153153

ImportImport ContainerContainer 3636

ImportImport MiscellaneousMiscellaneous 130130

TOTALTOTAL 1,3141,314

Sena Line ForecastSena Line Forecast(Thousand Tons)(Thousand Tons)

SectionSection CommodityCommodity 20102010

Moatize - BeiraMoatize - Beira CoalCoal 704704

Sena - BeiraSena - Beira TimberTimber 1717

Sena - BeiraSena - Beira CottonCotton 1616

Sena - BeiraSena - Beira Other downOther down 3232

Beira - SenaBeira - Sena FertiliserFertiliser 1414

Beira - SenaBeira - Sena CementCement 4242

Beira - SenaBeira - Sena POLPOL 6262

Beira - SenaBeira - Sena StoneStone 1515

Beira - SenaBeira - Sena ContainersContainers 9898

Beira - SenaBeira - Sena Other upOther up 2222

Marromeu - BeiraMarromeu - Beira SugarSugar 8585

Marromeu - BeiraMarromeu - Beira MolassesMolasses 3939

Muanza - DondoMuanza - Dondo LimestoneLimestone 169169

Malawi - BeiraMalawi - Beira All downAll down 199199

Beira - MalawiBeira - Malawi All upAll up 6363

TOTALTOTAL    1,5771,577

Mozambican Exports Mozambican Exports

($US Millions)($US Millions)

CommodityCommodity 19971997 19981998 19991999 20002000 20012001 20022002 20032003

AluminiumAluminium 0.00.0 0.00.0 0.00.0 60.260.2 473.1473.1 361.4361.4 567.6567.6

Mineral fuelsMineral fuels N/AN/A N/AN/A N/AN/A N/AN/A N/AN/A 136.0136.0 124.0124.0

FishFish 34.434.4 66.466.4 74.874.8 100.7100.7 102.2102.2 122.4122.4 73.573.5

PrawnsPrawns 74.974.9 57.457.4 64.664.6 91.291.2 82.282.2 N/AN/A N/AN/A

Agriculture Agriculture (excluding (excluding fish)fish)

103.0103.0 88.888.8 87.087.0 83.483.4 66.366.3 81.581.5 45.645.6

CottonCotton 22.222.2 10.910.9 20.220.2 25.825.8 23.523.5 16.016.0 32.432.4

Textiles and Textiles and clothingclothing

10.010.0 10.010.0 5.85.8 6.76.7 14.114.1 25.725.7 33.233.2

WoodWood 10.110.1 5.25.2 9.29.2 14.614.6 12.612.6 17.917.9 20.420.4

CashewsCashews 26.526.5 36.736.7 33.133.1 20.020.0 12.212.2 0.080.08 N/AN/A

OilseedsOilseeds 5.65.6 9.49.4 10.010.0 10.510.5 9.19.1 5.55.5 4.24.2

MiscellaneousMiscellaneous 7.67.6 15.115.1 8.28.2 10.810.8 10.710.7 15.515.5 15.815.8

TotalTotal 294294 300300 313313 424424 806806 782782 917917

Mozambican ImportsMozambican Imports ($US Millions)($US Millions)

CommodityCommodity 19971997 19981998 19991999 20002000 20012001 20022002 20032003

Minerals and fuelsMinerals and fuels176.7176.7 144.3144.3 152.5152.5 349.0349.0 353.3353.3 180.1180.1 377.8377.8

Agriculture (excluding Agriculture (excluding fish)fish)

165.6165.6 191.0191.0 131.2131.2 156.8156.8 143.6143.6 177.5177.5 142.1142.1

MachineryMachinery 74.474.4 85.985.9 60.560.5 188.9188.9 131.7131.7 174.8174.8 135.5135.5

Transport equipmentTransport equipment 113.4113.4 73.873.8 174.7174.7 174.8174.8 80.580.5 194.9194.9 67.667.6

Other chemical Other chemical productsproducts

38.538.5 41.641.6 25.325.3 59.959.9 78.378.3 86.686.6 53.853.8

Cereals (a)Cereals (a) 40.040.0 52.052.0 40.640.6 32.432.4 45.945.9 113.1113.1 86.886.8

Textiles and clothingTextiles and clothing 42.342.3 42.642.6 29.929.9 41.541.5 26.226.2 29.229.2 20.920.9

Wood and paper Wood and paper productsproducts

16.216.2 25.725.7 10.510.5 30.130.1 40.140.1 28.128.1 29.029.0

Non ferrous metalsNon ferrous metals 9.19.1 7.97.9 4.44.4 10.610.6 234.7234.7 16.016.0 8.88.8

TotalTotal 676676 665665 630630 10441044 11341134 10001000 922922