The role of transportation costs for people

Exports can enable developing countries to overcome the problem of small domestic markets. Manufactured exports from developing to industrial countries often require transfer of technological know-how from the latter to the former through repeated movement of engineers and other skilled personnel. The cost of this movement increases with distance. Distance from the temperate industrial world thus becomes an obstacle for productivity increase in the tropics. Export trading companies can help to conquer distance by gathering information and matching domestic producers with foreign buyers.