The Effects of International Transportation Costs on Production Location in Developing Countries: A Theoretical Approach

Griffin, C. (1984). The Effects of International Transportation Costs on Production Location in Developing Countries: A Theoretical Approach. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-84-079

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Abstract

Many developing countries are interested in determining the optimal level of forest sector production and an overall production program. This paper offers a theoretical approach to the aspects involved in determining such a production optimum which includes the development of a global model of forest resources, wood and fiber processing and international trade in forest products as a partial equilibrium economic model cast in the mathematical programming framework with linear constraints and a nonlinear objective function. The proposed model has been under investigation by the IIASA Forest Sector Project over the last several years. Therefore, rather than focusing on the continued development of the core model, the emphasis is now placed on proposing basic theoretical questions surrounding the forest sector to determine how transport costs, production costs, tariff and non-tariff barriers to trade, natural resource endowments and marketing costs will affect the location of various processing activities. This initial development will identify the need for a more structured empirical analysis in resolving these questions.

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