Title page

Contents

Acknowledgements 2

Executive Summary 6

1. The Norte Grande's growth potential can be tapped by developing integrated economic corridors 14

2. The Norte Grande's economic activity is mostly concentrated along a few major transport routes 16

2.1. Current economic activity is concentrated along a few North-South and East-West axes 16

2.2. Production in priority value chains tends to be spatially and economically concentrated 18

3. Supporting productive sectors requires addressing both transport infrastructure and service gaps 21

3.1. Cargo traffic tends to concentrate on a few routes connecting production areas to domestic and international markets 21

3.2. Most provincial roads are in poor condition and many roads are vulnerable to climate risks 24

3.3. Good rail connectivity is available to only some parts of Norte Grande 26

3.4. Most priority value chain firms outsource transport and logistics services 27

3.5. Most firms spend 〉15% of product sales value on transport services 28

3.6. Across the region, gaps in transport infrastructure and services affect firms in priority value chains 29

3.7. There is potential to shift some of the cargo to rail or fluvial transport, assuming improvements in the operating performance 34

3.8. Identifying road and rail investments that could bring the largest socioeconomic benefits 38

4. The shortlisted transport projects would generate significant direct and wider economic benefits 40

4.1. Some of the shortlisted projects would significantly reduce transport costs 40

4.2. The shortlisted projects would generate thousands of direct, indirect, and induced jobs 43

4.3. Beyond direct user benefits, the shortlisted works would boost provincial GDPs and gross value added 46

5. Improvements in electricity and digital connectivity are needed to amplify the benefits of better transport connectivity 50

5.1. Digital connectivity gaps impede productive activities and the quality of transport services 51

5.2. The region continues to face gaps in electricity access quality despite significant generation potential 54

6. Priority interventions to support the Norte Grande's economic corridors need to be coordinated across space and sectors 57

References 62

Annex 1: Economic activity and l ogistics patterns of value chains, by province 64

Annex 2: Using satellite imagery and machine learning to estimate road condition 76

Annex 3: Multi-criteria analysis to develop a shortlist of priority projects 77

Annex 4: Estimation of transport cost savings as a result of the pre-prioritized road and rail infrastructure works 79

Annex 5: Estimation of employment generation effects of the pre-prioritized road and rail infrastructure works 84

Annex 6: Estimation of expected macroeconomic effects of the pre-prioritized road and rail infrastructure works 87

Table 1. The priority investments selected through multicriteria analysis will generate not only direct but also broader economic benefits 9

Table 2. Both hard and soft transport interventions are needed to address Norte Grande's connectivity gaps 11

Table 3. There is high spatial concentration in most value chains; economic concentration is higher for export-oriented value chains 19

Table 4. The priority value chains in Norte Grande tend to use common routes to access domestic and external markets 22

Table 5. Challenges and opportunities for rail and waterway use vary by province and value chain 37

Table 6. The prioritized road and rail works mostly focus on infrastructure rehabilitation 40

Table 7. Complementary hard and soft transport and logistics interventions will be needed in every province 61

Figure 1. Significant gaps in the condition of the provincial road network result in high transport costs 6

Figure 2. As expected with any network investments, much of the benefits of road projects would accrue outside the province where the improvement works would take place 10

Figure 3. Registered salaried employment per km2 is concentrated in a few distinct corridors 16

Figure 4. Clusters of higher population density (2020) also align along major East-West national roads 16

Figure 5. Exporting firms concentrate in the same areas as registered employment; additional large firms cluster in the mining areas 17

Figure 6. The prioritized value chains account for over 62 percent of the Norte Grande's freight tonnage 19

Figure 7. For most Norte Grande producers, primary inputs are sourced from within Argentina 21

Figure 8. Annual Average Daily Traffic (2021) is more intense on roads crossing districts with high intensity of agricultural production 23

Figure 9. The most important rail cargo origin points (2022) are in Santiago del Estero and Tucumán 23

Figure 10. Over half of the total length of the provincial road network in the Norte Grande is estimated to be in poor condition 24

Figure 11. Unpaved provincial road segments in areas with a high propensity to form water pools (as captured by the TWI) are common in most provinces 25

Figure 12. The TWI is estimated to be above the critical threshold for 〉20% of provincial road length in several provinces 26

Figure 13. Most firms pay 10-20% of sales value in transport costs 28

Figure 14. Producers in individual value chains pay 〉20% of sales value on transport 28

Figure 15. Transport costs vary by sub-region and type of cargo generator; grain collectors generally pay more as a share of sales value 29

Figure 16. Cargo (grains) traveling from further away from Rosario tends to incur a higher total transport price but a lower unit price 29

Figure 17. High costs, poor road infrastructure, and climate related disruptions are common challenges with using road transport in NOA 30

Figure 18. Insufficient/missing infrastructure and long transport times are the main gaps in rail and fluvial transport in NOA 31

Figure 19. About 1/3 of firms in NOA are burdened by customs delays 31

Figure 20. Poor road infrastructure is a challenge for 4 out of 5 firms in NEA 32

Figure 21. Insufficient/missing infrastructure and lack of intermodal connectivity limit the use of rail and fluvial transport by NEA firms 33

Figure 22. At least 1/5 of NEA firms are burdened by customs delays and/or insufficient storage infrastructure 33

Figure 23. Potential to be moved by rail is higher for cargo originating in central and western Norte Grande 35

Figure 24. Cargo with destinations in NOA have the highest potential to be shifted to rail 35

Figure 25. Much of the grains produced in NOA could be moved by rail 36

Figure 26. The multicriteria analysis shortlisted 15 road projects 39

Figure 27. 5 potential rail projects were shortlisted 39

Figure 28. The estimated operating cost savings per ton-km range between 4 and 44 percent, depending on the segment 42

Figure 29. The total operating cost savings in the segment would exceed US$50 million per year in the case of some road projects 42

Figure 30. Total annual operating cost savings would be larger in the case of more comprehensive rail projects 43

Figure 31. The costliest road investments would generate upwards of 4,000 jobs each 44

Figure 32. Indirect and induced jobs represent most jobs generated by the shortlisted rail projects 44

Figure 33. Some road projects may require significant additional investment to make the infrastructure climate resilient 45

Figure 34. Salta's economy would most directly benefit from the improvement of NR34 47

Figure 35. The shortlisted transport improvements would generate significant GVA for Salta's manufacturing and "other" sectors 47

Figure 36. Jujuy's economy would benefit from road and rail improvements in the neighboring provinces 48

Figure 37. The agriculture sector in Jujuy would gain significant GVA 48

Figure 38. Catamarca's economy would most benefit from improved connectivity to Tucumán and Santiago del Estero 48

Figure 39. Catamarca's agriculture sector would be a key beneficiary in terms of its GVA 49

Figure 40. The rehabilitation of NR11 would generate the most significant benefits for Chaco's economy 49

Figure 41. Chaco's manufacturing sector would be a key beneficiary as measured by sectoral GVA 49

Figure 42. The rehabilitation of NR14, connecting to Entre Rios, would generate significant economic benefits for Corrientes 50

Figure 43. The agriculture sector would reap over half of the GVA 50

Figure 44. Average download speeds are lowest in Santiago del Estero and Jujuy; fixed broadband penetration - in Formosa and Chaco 51

Figure 45. Areas far from national roads lack 3G/4G connectivity 52

Figure 46. REFEFO aligns with major national roads 52

Figure 47. Most firms find it important to have mobile connectivity en route 54

Figure 48. Most firms access electricity through local cooperatives and distributors 56

Figure 49. The perception of electricity service quality is somewhat better in NOA than NEA 56

Boxes

Box 1. Tools developed to help prioritize investments, with applicability in other regions and countries 13

Annex Tables

Table 1.1. Percentage share of value chains in the total provincial load 64

Table 1.2. Logistic Vulnerability Index Sub-indicators 74

Table 1.3. LVI by province-value chain pair 75

Table 3.1. Dimensions, Attributes, and weightings considered in the Multicriteria Analysis 78

Table 4.1. Speed assumptions 79

Table 4.2. Speed assumptions by scenario 80

Table 4.3. Ton-Kilometers associated with each project 81

Table 4.4. Ton-Kilometers associated with each project assuming growth in the cargo volumes transported by rail 82

Table 4.5. Savings in Road Transportation Operating Costs in Selected Road Works. In US$ per ton-kilometer 82

Table 4.6. Rail Transportation Operating Cost Savings in Selected Projects. In US$/ ton-km 83

Table 4.7. Total Cost Savings (operating + maintenance) of Rail Transportation in Selected Projects. In US$/ ton-km 83

Table 5.1. Unit Costs of Selected Works 85

Table 5.2. Direct, Indirect and Induced Employment Impact of Selected Road and Railway Works. In jobs 86

Annex Figures

Figure 1.1. Production intensity of priority products in the Norte Grande 65

Figure 1.2. Survey responses were received from firms - including producers and grain collectors - distributed across Norte Grande provinces 67