A new paper by Sebastian Krantz presents estimates of the cost of regional regulatory and border frictions for trade and cost-benefit analysis of different road infrastructure investments in Africa. Several general results are worth emphasizing:
- Reducing border frictions would yield high economic benefits, while upgrading roads to allow faster travel would also have large benefits, particularly near economic centers such as greater Johannesburg.
- Cost-benefit analysis suggest investments to connect economic hubs, such as Johannesburg and Maputo, are cost effective and macroeconomically achievable under reasonable assumptions.
With respect to South Africa, the paper suggests investment to improve connectivity around Johannesburg, between the Durban-Johannesburg-Maputo Triangle, Cape-Town-Gqeberha and Cape-Town-Johannesburg would have high economic returns. It also suggests that investing in economic corridors further north and west would be a good idea. The results also imply that border frictions, while low by comparison to other parts of Africa, should be further reduced.
