Landlocked

What Is Landlocked?

A landlocked country or region is one that is entirely enclosed by land, having no direct access to an ocean or sea. In the context of international economics and development, being landlocked presents unique challenges that can significantly influence a nation's economic growth and participation in the global economy. The lack of a coastline implies reliance on neighboring countries for access to maritime routes, which are typically the most cost-effective means of international trade. This geographical constraint is a core concept within development economics, highlighting the inherent difficulties some nations face in fostering robust economic activity.

History and Origin

The economic implications of being landlocked have been observed throughout history. Adam Smith, in "The Wealth of Nations" (1776), noted that the inland parts of Africa and Asia were among the least economically developed areas of the world, implicitly recognizing the challenges posed by geographical isolation.¹² Over centuries, the fundamental disadvantage of high trade costs due to distance from seaports has persisted, even with advancements in transportation technology.

The formalized recognition of these challenges at an international level has led to various initiatives. The United Nations has specifically addressed the needs of Landlocked Developing Countries (LLDCs), acknowledging their inherent vulnerabilities.¹¹ For example, the Vienna Programme of Action for the Landlocked Developing Countries for the Decade 2014-2024 aimed to address these special development needs through strengthened partnerships with transit countries and development partners.¹⁰ This program recognized that factors beyond mere geography, such as restrictive trade policies in transit countries, also contribute to the economic isolation of landlocked nations. An International Monetary Fund (IMF) study revealed that many landlocked countries restrict trade in services—like telecommunications and air transport—that are crucial for connecting them to the rest of the world, often more so than coastal countries.

##⁹ Key Takeaways

• A landlocked country has no direct access to an ocean or sea, relying on neighboring nations for maritime trade routes.
• This geographical reality often leads to higher logistics costs and increased dependence on transit trade agreements.
• Landlocked status can impede economic development, limit opportunities for foreign direct investment, and affect global supply chain integration.
• International efforts, such as the Vienna Programme of Action, aim to mitigate the disadvantages through regional cooperation and infrastructure development.
• While a geographic condition, the economic impact of being landlocked can be influenced by policy choices, infrastructure quality, and regional bilateral agreements.

Interpreting the Landlocked Status

The status of being landlocked is a fundamental geographical attribute, not a numeric value that requires calculation. However, its interpretation lies in understanding its profound impact on a country's economic indicators and policy considerations. A landlocked nation typically faces elevated transportation costs for both imports and exports, which can inflate consumer prices and reduce the competitiveness of its goods in international markets. This often leads to a higher cost of doing business and can deter external investment.

Policymakers in landlocked countries often focus on strategies to overcome this disadvantage. This includes investing in robust domestic infrastructure, negotiating favorable transit agreements with neighboring countries, and promoting regional integration to create larger internal markets. The effectiveness of these strategies can be gauged by improvements in trade volumes, diversification of the Gross Domestic Product (GDP), and reductions in the costs associated with international trade.

Hypothetical Example

Consider two hypothetical countries, Portonia and Landania, both with similar population sizes and agricultural outputs. Portonia has a long coastline with a well-developed seaport. Landania, however, is landlocked, surrounded by Portonia and another country, Hinterlandia.

When Landania wants to export its agricultural surplus to overseas markets, it must transport goods by road through Portonia to reach its port. This involves multiple border crossings, transit fees, customs procedures, and additional time for transportation. For example, a container of grain from Landania might incur a 20% higher cost to reach an international market compared to the same container originating from Portonia, due to overland transport expenses, administrative delays, and potential storage fees at the port. This additional cost reduces the profitability for Landania's farmers and makes their produce less competitive globally. Conversely, importing essential goods like machinery or oil into Landania also carries these increased costs, ultimately affecting the nation's overall economic activity.

Practical Applications

The concept of a landlocked country is critically important in several areas of finance and international policy:

• International Trade and Logistics: Businesses engaged in global supply chains must account for the added complexity and cost when dealing with landlocked nations. This involves navigating customs procedures, transit permits, and often less efficient transportation networks.
• ⁸ Development Aid and Investment: International organizations and donor countries often prioritize developing countries that are landlocked for assistance in infrastructure development, trade facilitation programs, and capacity building. This is because their geographical disadvantage is recognized as a significant barrier to economic development.
• ⁷ Geopolitical Analysis: A country's landlocked status can influence its foreign policy and regional relationships, as stable and cooperative relations with transit neighbors are crucial for economic viability. Border disputes or political instability in transit countries can severely disrupt a landlocked nation's trade and economy.
• ⁶ Risk Assessment: Investors assessing the risk profile of emerging markets will consider landlocked status as a factor, particularly regarding trade reliability and the potential for disruptions in logistical pathways. Reports on the poorest countries in the world often include a significant number of landlocked nations, underscoring this vulnerability.

##⁵ Limitations and Criticisms

While being landlocked presents inherent geographical challenges, it is not an insurmountable barrier to economic prosperity. A key criticism of focusing solely on landlockedness is that it can overshadow the role of domestic policy and institutional quality. Some studies suggest that while geography plays a role, policy choices regarding services trade (like telecommunications and air transport) and the efficiency of border regimes in transit countries can have a more significant impact on a landlocked country's trade performance and overall economic health.,

C⁴o³untries like Switzerland and Luxembourg, though landlocked, are highly developed economies. Their success is often attributed to strong institutions, efficient governance, diversified economies (often service-oriented), and effective regional trade agreements that mitigate the geographical disadvantage. Conversely, many landlocked developing countries continue to struggle with high trade costs, poor infrastructure, and dependence on commodity exports, exacerbating their geographical isolation. The challenge for these nations lies not just in their geography, but also in improving internal policies and fostering strong cooperative relationships with their neighbors.

Landlocked vs. Geographically Disadvantaged Economy

The terms "landlocked" and "geographically disadvantaged economy" are often used interchangeably, but "geographically disadvantaged economy" is a broader classification.

While every landlocked country is, by definition, a geographically disadvantaged economy, not every geographically disadvantaged economy is landlocked. For instance, a small island state might be geographically disadvantaged due to its remote location and vulnerability to rising sea levels, even though it has ample access to the sea. The term geographically disadvantaged economy encompasses a wider array of physical characteristics that can hinder economic development.

FAQs

What are some examples of landlocked countries?

Examples of landlocked countries include Switzerland, Austria, Bolivia, Paraguay, Ethiopia, Afghanistan, and Mongolia. There are 44 landlocked countries globally, with 32 classified as Landlocked Developing Countries (LLDCs).

##²# How does being landlocked affect a country's economy?
Being landlocked typically leads to higher trade costs due to reliance on overland transport through neighboring countries to access seaports. This can reduce competitiveness, deter foreign direct investment, and slow down economic growth.

Can a landlocked country be economically prosperous?

Yes, a landlocked country can be economically prosperous. Countries like Switzerland and Luxembourg demonstrate that strong institutions, diversified economies, efficient infrastructure, and effective regional integration can mitigate the disadvantages of not having direct sea access.

What is the Vienna Programme of Action?

The Vienna Programme of Action for the Landlocked Developing Countries (LLDCs) for the Decade 2014-2024 was an international framework aimed at addressing the special development needs and challenges faced by LLDCs. It focused on areas like transit policy, infrastructure development, and international trade.¹