The definition of landlocked is to be “almost or entirely surrounded by land.” There are currently 49 countries in the world that are landlocked, these countries are often put at a disadvantage due to their lack of access to the coast. Without this access it becomes difficult for these countries to enter global markets. In this essay I will explain why this is the case. Currently 31 out of the 49 landlocked countries are classified as “developing countries”, in addition 20 out of the 50 least developed countries are landlocked. In Western Africa the average Human Development Index (HDI) is 0.12 different between landlocked countries and their coastal neighbours 1 thus proving that something is holding back landlocked countries in comparison to their maritime neighbours. Furthermore, Western Africa export 12% of what their maritime neighbours do. There are four factors that I will discuss as to why landlocked countries are dependent on their neighbours; good neighbouring infrastructure, peace and stability, good relations and good administrative procedures. To answer this question, I will use specific examples of countries around the world and how they are dependent upon their neighbours. On the other hand, I will look at countries that have thrived despite being landlocked and how they have achieved this. I will be specifically focusing on four countries from South America, Africa and Europe. In South America I will study Bolivia and how reliant it's economy is on Chile in order to access the South Pacific via Chilean ports. Furthermore, I will look how reliant Bolivia is on its access to the coast and whether it can thrive without Chile. In Africa I will study Botswana and Malawi and specifically how Botswana has a higher Gross Domestic Product (GDP) per capita than its coastal neighbour South Africa. In Europe I will study Switzerland and how it has the seventh highest GDP per Capita in the World14 without having direct access to the sea.
The first way in which landlocked countries are reliant on their neighbours is the reliance on good infrastructure. The increased distance to the sea increases transportation costs which raises the cost of the exported or imported good. In order to keep export prices as low as possible good infrastructure is required to reduce journey times. Poor infrastructure in neighbouring countries can make it hard for landlocked countries to enter global markets as many landlocked countries are exporting goods with low value to cost ratios making it inefficient to use air transport thus requiring access to the sea. The transport of primary commodities such as logs exported by the Central African Republic has also deteriorated the already insufficient infrastructure. Studies have shown that six axle trucks used to transport heavy materials have been proven to be 138,000 times more damaging than a typical small car 2. Furthermore, Jean-Francois Arvis of the World Bank has concluded that lorries in landlocked countries can cover 250 kilometres per day whereas coastal economies can travel 500 kilometres in a day. This is due to the significantly more advanced infrastructure enabling faster transit times. This huge increase in transport time raises the cost of exporting goods making it extremely difficult for landlocked countries to integrate into the global economy. In addition, poor infrastructure has made imports more expensive therefore increasing the cost of improving infrastructure, this has made it difficult for developing countries to improve their trade routes and access to ports thus having a negative effect on landlocked countries.
On the other hand, certain landlocked countries are not reliant on their neighbour’s infrastructure. For example, Switzerland has by-passed the issue of requiring access to the sea by primarily exporting gold and services in the banking industry. Switzerland has a GDP per capita of US$78,812, this is the seventh highest in the world according to the World Bank. One reason for the success of Switzerland’s economy is due to the high value to cost ratio of its exports. Switzerland’s total goods & services exports accounted to US$432 billion7 and exports of gold alone were US$114 billion (approximately 29% of its all exported goods) in 2016 6. In addition, Switzerland is a world leader in processing gold, due to the high value of gold it makes air transport viable meaning that access to the sea is not required as much as it is for countries exporting primary goods. Furthermore, Switzerland’s large finance sector in which no access to the sea is required plays a large role in the development of the country, in 2009 Swiss banks managed approximately US$5.4 trillion8 and in 2014 the banking sector contributed approximately US$80 billion to the Swiss economy and 400,000 jobs 11.
Bolivia is another country that has managed to avoid a large dependence on its neighbours, one way in which it has done this is by capitalising on its central location and exporting to nearby neighbours, over 50% of Bolivia’s exports are within the region with 37.5% going to Brazil, 9.8% going to Argentina between and 5.2% to Peru between the years 2010-12 15. This means that Bolivia doesn't have to rely on Chile for a large proportion of its exports, however access to the sea is still required. Its access to the coast has been improved because of a railway built between the Chilean port of Arica to Bolivia’s capital city Le Paz. The railway was built by the Chilean government under the Peace and Friendship Act between Bolivia and Chile in 1913, which reduced transport costs of getting to the sea. However, the railway closed in 2005 meaning that Bolivia had to resort back to road transport, thus increasing the price of transport and export prices.
In Southern Africa, Botswana has also managed to avoid a large reliance on neighbouring infrastructure by having vast natural resources that can be exported via air. In 2016 Botswana exported US$8 billion worth of diamonds making up 44% of total exports 6. However, being so reliant on one export can result in “Dutch Disease” which is a theory that if a country exports one product other exports become less internationally competitive. For example, Botswana primarily export diamonds resulting in large amounts of foreign currency entering the country. This leads to an appreciation in the currency which can make other export industries uncompetitive due to the higher costs to buy the currency, making Botswana’s exports more expensive for other countries.
In conclusion, there is a strong dependence on neighbours for good infrastructure if the country is exporting primary goods with a low value to cost ratio. However, if a country has vast natural resources then there is a smaller reliance on neighbours to access the sea as air transport can be used instead. Furthermore, in the case of Bolivia by having a central location a large amount of exports can go to neighbours reducing the reliance on a neighbouring country for good infrastructure.
Secondly, landlocked countries rely heavily on peace and stability within neighbouring countries. If there is instability and conflict within a neighbouring country, routes can be cut off and it can become dangerous to transport goods through that country, resulting in another path having to be taken. An example of how conflict has affected transport routes can be seen in Malawi when its neighbour Mozambique had a civil war between the years 1977-92 meaning the majority of its freight had to be re-routed. Before the civil war 95% of exports travelled through Beira (947 km) taking four days to get to and Nacala (1,014 km) taking three days. During the civil war the ports of Durban (South Africa) and Dar el Salaam (Tanzania) were used taking 7 days (2,419 km) and 6 days (1,499 km) *. As a result of the re-route insurance and freight costs doubled from 20% to 40%. In addition, Malawi paid US$50-80 million (equivalent to 4-6% of Malawi’s GDP) per year more to export goods. This large increase in exporting costs had a huge impact on the GDP of Malawi, showing that certain landlocked countries are extremely reliant upon neighbours to maintain peace. There are few landlocked countries whose neighbours have avoided war. However, Bolivia and Paraguay are an exception, the borders have never been closed due to conflict in neighbouring countries 1. This has meant that re-routing has never had to occur thus keeping costs lower than countries that have had to deal with war in neighbouring countries. Furthermore, in Asia, Kazakhstan has been fortunate that there has been no conflict whilst it has been using Chinese ports. Kazakhstan accesses the Pacific through the port of Lianyungang in which eight million tonnes of goods have been exported since the opening in 2014 9. To conclude, there is a definite reliance on neighbouring countries to maintain peace and stability and there is little that landlocked countries can do if there is conflict other than to re-route. It is evident that re-routing can have major effects on the GDP of a country and this makes up a larger percentage (of GDP) if the country is poor.
Thirdly, landlocked countries require good political relations with their neighbours in order to maintain access to the sea. Bad political relations can result in the coastal country blockading borders resulting in no trade to and from the sea. However, this problem has been managed by Article 125 of the United Nations convention on the Law of the Sea which states “Land-locked States shall have the right of access to and from the sea for the purpose of exercising the rights provided for in this Convention” and that “land-locked States shall enjoy freedom of transit through the territory of transit States by all means of transport.” 3 In practise this law has had different impacts because Section Three of the Article states that transit states can “exercise their full sovereignty over their territory.” One example of tension between two countries can be seen in Bolivia who has experienced hostility with Chile since the war in 1878-83 in which Chile gained 400 kilometres of Bolivia’s coastline. Recently, exports of newly found gas reserves have been delayed due to the protest of the use of Chilean ports 1. Furthermore, in 1992 Ethiopia became landlocked after losing access to the Red Sea, in 1998 the war with Eritrea meant that the ports of Assab and Massawa could not be used resulting in a re-routing to the port of Djibouti in Somalia 1. This drastically increased the price of exports as studies have shown that it costs more to transport a container from Addis Ababa (capital of Ethiopia) to Djibouti than to ship the same container from China to Djibouti 5. In addition, the ports in Eritrea provided duty free trading which is not the case in Djibouti. Nonetheless, some countries have managed to maintain good-cross border relations. Botswana and its neighbours have developed the Southern African Transport and Communications Commission. This has integrated transport policies between the neighbours and has ensured good relations meaning that there are fewer incidences in which borders are closed or access to ports is restricted. The agreement aims to “provide freedom of transport and strengthen regional infrastructure” 1. In addition, Eastern Africa has reintroduced the East African community which aims to improve vital transport corridors. In South America, Bolivia is a member of the Andean Community 4 and Latin American integration association which aims to integrate regional agreements. This has prevented issues between Bolivia and Chile by aligning their goals of future growth and development 10. To conclude, there is a dependence on good cross border relations as neighbouring countries can restrict access to the coast. However, with good governing agreements partnerships can be formed in order to bypass the issue. For example, despite Bolivia and Chile having tension dating back to the war, Chile still gives Bolivia access to its ports in which approximately 47.5% of Bolivia’s exports travel through 15.
Finally, landlocked countries rely on efficient border and port administration as this can contribute the most to shipping costs. Often when transporting goods there can be border delays due to fees required to cross the border and poor administration, in Africa due to the unreliable rail freight between Kampala in Uganda and Mombasa in Kenya it is hard to book ships before arrival as journeys can take anywhere between 14 and 21 days 1. This can result in high waits at the port increasing the cost of exporting goods. In Chile strikes at customs in 2013 resulted in queues of 20 kilometres proving that there is a reliance on neighbours to maintain efficient border and port systems in order to reduce transport costs for the landlocked country 12. However, there are exceptions to this dependence. In South Africa, countries of The South African Development Community and the Common Market for Eastern and Southern Africa have lower fees on crossing the border due to insurance guarantees and common licenses. This has significantly lowered the cost of entering and passing through neighbouring countries. In conclusion, there is a reliance on neighbouring countries to provide efficient border and port security in order to travel through that country faster. Furthermore, landlocked countries rely on low prices at the border and port in order to enter the neighbouring country and leave it with minimal fees. These costs can be reduced by regional agreements in order to keep insurance costs down thus lowering total costs of the good.
To conclude, there is certainly a reliance for landlocked countries on their neighbours. The most important factor in which landlocked countries depend on is infrastructure. With weak or no infrastructure, it makes transport so expensive that it is impossible to enter global markets due to the price of the export being so uncompetitive. The second most important factor is the reliance on good relations with neighbouring countries, if relations drastically worsen the coastal neighbour can simply close the border cutting off all trade by sea. Therefore, there is a huge dependence on good cross border relations. The third most important dependence is the reliance on the coastal economy to maintain peace and stability. If there is conflict in a neighbouring country then access to ports and the coast can become difficult. As a result, re-routing is the only option which significantly increases the time and cost in which to reach the sea. Finally, the reliance on good administrative procedures. This can have a large impact on the total cost of exports as there is a reliance on efficient border and port control in order to transport the goods quickly.
For countries that have thrived there is still a large reliance on neighbours. For example, Switzerland exports 27.3% 6 to its direct neighbours and reliance on the infrastructure of its neighbours in order to export other goods. Despite improved relations between the Bolivia and Chile, Bolivia’s foreign ministry claims being landlocked has cut GDP growth by 1% every year since Bolivia lost their coastline in 1983 5. In addition, Fabrizio Carmignani of Griffith University in Australia has also calculated that “Bolivia’s GDP would be a fifth higher if it had kept its access to the sea” 12. Paul Collier and Steve O’Connell also investigated the reliance of landlocked countries on their neighbours and came to a mathematical conclusion proving that on average landlocked countries are more reliant on their neighbours than other countries are. The global average was that if a country’s neighbour grew by 1% the country would grow by 0.4% as part of a spill over effect. However, for landlocked countries that figure was 0.7%13, proving that landlocked countries are reliant on good neighbours in order to succeed. Michael l. Faye and his colleagues also concluded that landlocked countries on average have a 9% higher trade cost than coastal economies further proving the reliance upon neighbours’ infrastructure, stability and administrative costs to keep the cost as low as possible.13
To finalise, landlocked countries with a lack of natural resources (of high value) and that are surrounded by poorly developed countries will struggle the most. As displayed in the book ‘The Bottom Billion’ there are potentially nine ways in which a landlocked country can attempt to boost growth. In my opinion, one of the best ‘policies’ from the nine outlined is to encourage emigration. This means that remittances are sent back to the landlocked country which can stimulate demand. To increase emigration and thus remittances, training is required to ensure that emigrants are as skilled as possible thus increasing the amount they earn and are able to send back. In addition, good banking infrastructure is required to easily transfer money to the landlocked country. For example, remittances in the landlocked country of Tajikistan make up 35% of total GDP16. Secondly a policy not included in The Bottom Billion is to manipulate the currency. This can be seen in the case of China who keep the Yen at a low value thus increasing exports by making them cheaper. If a landlocked country did this it makes their exports more internationally competitive potentially opening a gap into global markets which was originally difficult, due to high transport fees making exports very expensive.