Accessibility in The Legal Amazon: Measuring Market Access

An excellent transportation infrastructure is essential for promoting regional development. Areas served by efficient networks of waterways, railways and roads are well-equipped to do business with other regions. This ends up increasing local competitiveness and influencing businesses and individuals to establish themselves in the region. The increase in the number of businesses and workers, in turn, leads to economies of scale, further strengthening the region’s competitiveness and attracting even more businesses and workers.1,2,3,4,5,6,7

Improving accessibility is a key strategic component in remote and sparsely populated areas such as the Legal Amazon. To improve a region’s accessibility, one challenge is to identify – among the various existing logistical infrastructure investment possibilities – the best investment opportunities to increase the region’s accessibility. This requires appropriate accessibility metrics that summarize how different investments influence a region’s accessibility.

Building these metrics, however, is conceptually complex, since any region has numerous relevant transportation costs, and each one of them influences regional economies in different ways. For example, the set of transportation costs relevant to the competitiveness of a producer who imports materials from outside the region and produces for the local market will be completely different from the transportation costs relevant to a producer who imports materials from one location and exports its product to another part of the country.

This report presents groundbreaking estimates of the accessibility of the municipalities in the Legal Amazon. It first discusses how it is possible to summarize the effects of the transportation cost structure on a regional economy in a single metric called market access. It then presents the data and procedures used to construct the market access metric for Brazilian municipalities. Next, it discusses how the accessibility of the municipalities in the Legal Amazon compares to the accessibility of the municipalities in other parts of the country. Finally, it breaks down the accessibility metrics into different components to show that the poor quality of the transportation network is the key factor in the greater isolation of the municipalities in the Legal Amazon compared to the other municipalities in Brazil.