Why are landlocked countries automatically at a disadvantage? Is there a way to overcome these disadvantages?
Landlocked countries (countries surrounded by land on all sides) are at an automatic disadvantage. They lack access to waterways, and they’re at the mercy of the countries around them—good or bad. Luckily, there are a few things these countries can do to improve their situation.
Continue reading to learn more about the disadvantages of landlocked countries.
Economist Paul Collier’s third trap for poor nations is being landlocked. In Collier’s view, geography makes a big difference in economic performance. Nations that are surrounded on all sides by other nations and lack access to waterways are at a significant economic disadvantage because trade routes are largely out of their control.
Here are the two main disadvantages of landlocked countries:
Higher Transport Costs
Collier cites research by economist Jeffrey Sachs, who found that being landlocked reduces a nation’s GDP by about half a percentage point. Because so much trade occurs through seaports and other waterways, countries lacking direct access to these routes pay more to get their goods to global markets.
Impact of Neighboring Countries
Landlocked countries are also dependent on the economic policies of their neighbors, which Collier says can be a positive or a negative. Research suggests that if a landlocked country’s neighbors grow by an additional 1%, it grows by an additional 0.7%, due to spillover effects. For example, landlocked Switzerland has benefited from the growth of neighboring countries France and Germany, because higher incomes in these countries are often spent on Swiss imports.
In Africa, however, most countries are landlocked and suffer the negative spillover effects of their low-growth neighbors.
Strategies for the Landlocked
Collier has identified nine strategies that can help mitigate the disadvantage of being landlocked. We’ve grouped them into two categories: Be kind to your neighbors, and be inviting to outsiders.
Be Kind to Your Neighbors
Landlocked countries can help their neighbors grow by working together on transport infrastructure, which affects all parties in the region. Reducing regional trade barriers can also facilitate growth.
Be Inviting to Outsiders
For the bottom billion, cultivating an environment for Western partnerships is crucial. Collier names four ways to attract help from global partners:
- Set superior policy. For example, Lebanon became a financial hub for the Middle East because of its pro-business posture.
- Take advantage of exports via airplane freight and e-commerce opportunities by setting proper regulatory policy. This can help compensate for lack of access to bridges and seaports.
- Be a good investment. Violence, corruption, and instability scare off would-be benefactors like the World Bank and IMF. Curbing these forces can entice loans and financial aid.
- Encourage remittances (expatriates sending money back to their native country) by making cross-border banking easier.
|Helping the Landlocked: The Vienna Programme of Action|
Since the publication of The Bottom Billion, the United Nations has launched an initiative to assist landlocked nations in facing their unique challenges. The Vienna Programme of Action for Landlocked Countries (VPoA) is a decade-long program initiated in 2014 to help the 32 nations classified as landlocked.
The program helps facilitate transport agreements between landlocked nations and with neighbors who have access to the sea, expanding opportunities for trade and reducing transit costs.
It has also encouraged another one of Collier’s proposals by emphasizing growth in Information and Communication Technology (ICT). As a result, Armenia’s ICT sector, for example, grew by 38% in 2017.
|Becoming Landlocked: The Colonial Partitioning of Africa|
The seemingly arbitrary national boundaries that make economic and political development in modern Africa difficult can be traced back more than a century.
In the late 1800s, European powers discovered the potential of Africa as a reservoir of natural resources that could be used to fuel the Industrial Revolution. In what became known as “The Scramble for Africa,” these nations competed for territorial claims to the continent. This mad dash culminated in the Berlin Conference of 1884, where 13 European nations and the United States met to divide up Africa.
The result was a set of national boundaries with scant regard for the African people or their tribal, linguistic, and cultural divisions. Most of the boundaries drawn at the Berlin Conference lasted through the era of colonialism and independence and are still in effect today. These national divisions form a persistent problem that is largely unique to Africa. 16 African countries are landlocked, by far the most of any continent.
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