Transport endowment, knowledge spillovers and firm performance in emerging economies

Abstract

AbstractThis work explores the link between firm performance in emerging economies and transport infrastructure endowment, as a key element of the entrepreneurial ecosystem. We ground on the idea that transport infrastructures, by enabling connectivity, interactions and the exchange of knowledge and ideas, have the potential to enhance commercial opportunity recognition, technological development and, thus, firm economic performance. We also emphasize the crucial role of logistics system performance in providing better linkages between suppliers, firms and customers. The empirical analysis is focused on emerging economies whose infrastructure endowment is lower than those of developed ones; thus, its improvement is likely to be associated with better performance of their firms and economies. The results suggest that part of country-level differences in firm’s labour productivity is explained by transport endowment. Particularly, transport networks, such as roads and railways, and the logistics system and services show strong and positive relationships with productivity, while transport nodes, such as airports and ports, show little or no association. This might occur because networks spread knowledge spillovers in a more capillary way compared to nodes. Overall, the empirical results suggest that policy-makers in emerging economies can sustain the economic performance of firms, with beneficial effects on the economic system, by improving their transport endowment.