Trade logistics costs in landlocked developing countries: The role of bargaining power

Abstract

For landlocked countries, the right to access the sea is subject to negotiated agreements. Using the relative trade and the number of alternative transit countries, this article examines the importance of bargaining power for landlocked developing countries. We analysed the effect of bargaining power of landlocked countries on trade logistics costs related to international trade by sea. We use panels of landlocked and coastal developing countries with random-effect estimators. Our finding suggests that the bargaining power gained through trade ratio affects the trade costs of landlocked countries, while the number of transit countries is of negligible importance. The finding implies that landlocked countries should assess their bargaining position and devise appropriate strategies.