An Impact Analysis of Logistics Accessibility Improvements on the Productivity of Manufacturing Sectors

This study constructs a theoretical production function that incorporates logistics accessibility and analyzes the economic impacts of improvements in freight transport for a regional economy. Using panel data between 1995 and 2010 for Japan, we evaluate the impacts of interregional logistics accessibility, or inbound (outbound) shipping of intermediate (final) goods, on production activity. The results show that the production function has increasing returns to scale, which positively affects production activity, regarding logistics accessibility. In addition, the estimated elasticity of transportation costs changes; that is, logistics improvements in procurements (sales) decrease (increase) with time. Furthermore, the impacts of cost improvements on production activity differ across manufacturing sectors. This empirical analysis supports the logistics strategies of transportation efficiency and relocation of factories and warehouses in manufacturing sectors. In accordance with the Weber location-production problem, this empirical analysis supports production-oriented location for input goods and market-oriented location for output goods.