# Territorial Obstruction of Trade

## Definition

The capacity of a nation controlling territory along a trade route to impede or block the commerce of upstream or inland nations. When a river passes through foreign territory before reaching the sea, the controlling nation can obstruct communication between the interior country and maritime markets. This political-geographic constraint limits the effective market available to inland producers regardless of the physical navigability of the waterway.

## Source Chapter

Book 1, Chapter 3: "That the Division of Labour is Limited by the Extent of the Market"

## Context

Smith introduces this concept when explaining why Africa and interior Asia remained undeveloped despite having some large rivers. He illustrates it specifically with the Danube: its navigation is "of very little use to the different states of Bavaria, Austria, and Hungary" because none of them controls the river's full course to the Black Sea.

## Economic Domain

Exchange

## Smith's Original Wording

> "The commerce, besides, which any nation can carry on by means of a river which does not break itself into any great number of branches or canals, and which runs into another territory before it reaches the sea, can never be very considerable, because it is always in the power of the nations who possess that other territory to obstruct the communication between the upper country and the sea."

## Modern Interpretation

This identifies what modern economists and political scientists call transit risk or landlocked disadvantage. Landlocked countries today face systematically higher trade costs and dependence on neighbours' infrastructure and political goodwill — a constraint that continues to impede development, as documented in extensive World Bank research.
