No.74 Effects of Transport Corridor Development on Firms'Locational Choice and Firms' Perception of Business Environment: A Preliminary Analysis of Transport Corridors in Mozambique

This paper aims to conduct a preliminary analysis of the expected effects of a transport infrastructure project on firms’ locational choice and business environment in Mozambique, using a baseline firm survey. We compare firms’locational choice factors and their perceptions of the business environment between the underdeveloped Nacala corridor, where a road improvement project is being implemented, and the well-developed Beira corridor as a comparator. On the firms’ locational choice, we find a statistically significant difference between the two corridors, after controlling for firms’ characteristics. While the firms emphasize closeness to customers in the Beira corridor, the firms emphasize better infrastructure in the Nacala corridor. We also find statistically significant differences in some business environment factors between the two corridors. In the Nacala corridor, the firms consider transport infrastructure to be problematic for operation and growth. In the Beira corridor, the firms believe some factors related to government administration and regulations are obstacles. These results are still preliminary. At this stage of our research, we can only point out the possibility that the conditions of transport infrastructure may affect private firms’ self-evaluation of their locational choice and their business environment. Keywords: Transport infrastructure, Locational choice, Business environment, Impact analysis,Mozambique