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Logistic costs and Brazilian regional development

Newton de Castro

[August 2004]

Abstract: The objective of this paper is to discuss the role of logistics and transport policy in Brazilian regional development. The role of transport policy as an instrument for regional development is reviewed, focusing on the expansion of both rail network, in the late nineteenth and early twentieth centuries, and the paved trunck road network, mainly after the 1950´s. Estimates of the present size and a picture the recent evolution of the freight transport industry are shown, following a discussion of the major determinants of logistic costs. Evidence of the logistic performance of agricultural, industrial and commercial firms allows tentative conclusion regarding the implications of the physical and commercial linkages between states, as well as network interdependencies. The final section discusses strategies and policies to reduce logistic costs that are effective in terms of contributing to regional development, emphasizing financing and regulatory issues, as well as the development of coherent strategies across political jurisdictions.