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Does Trade Facilitation Matter In Bilateral Trade?

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  • Chahir Zaki

    () (Centre d’Economie de la Sorbonne, Université Paris 1 Pantéon Sorbonne and Paris School of Economics)

Abstract

This paper estimates an augmented gravity model incorporating different aspects of trade facilitation in developed and developing countries. Trade facilitation is defined as measures that aim at making international trade easier by eliminating administrative delays, simplifying commercial procedures, increasing transparency, security and the place of new technologies in trade. This paper provides new theoretical and empirical enhancements. On the one hand, the model is based on theoretical foundations related to monopolistic competition and border effects. The originality of this paper is that trade facilitation facets are included in the model. On the other hand, the empirical achievement of the paper is that it uses different databases allowing us to take into account many features of trade facilitation. I use several databases coming from different sources: Doing Business (World Bank) and Institutional Profiles (CEPII). My main findings show that transaction time for imports and the number of documents for exports have a negative impact on trade. Our sample is split into sub-samples in order to take into account the impact of development level. It turns out that trade facilitation aspects have not the same impact on developed and developing countries. Finally, we conclude that some perishable (food and beverages), seasonal (wearing apparels) and high-value added products are more sensitive to import time than other products. Hard industries are rather sensitive to export documents.

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Bibliographic Info

Paper provided by Economic Research Forum in its series Working Papers with number 472.

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Length: 36 pages
Date of creation: Mar 2009
Date of revision: Mar 2009
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:472

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References

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  1. Hummels, David, 2001. "Time as a Trade Barrier," GTAP Working Papers 1152, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  2. Bruce A. Blonigen & Wesley Wilson, 2006. "New Measures of Port Efficiency Using International Trade Data," NBER Working Papers 12052, National Bureau of Economic Research, Inc.
  3. Lionel Fontagné & Thierry Mayer & Soledad Zignago, 2004. "Trade in the Triad: How Easy is the Access to Large Markets?," Working Papers 2004-04, CEPII research center.
  4. Simeon Djankov & Caroline Freund & Cong S. Pham, 2010. "Trading on Time," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 166-173, February.
  5. Wilson,John S. & Mann, Catherine L. & Otsuki, Tsunehiro, 2003. "Trade facilitation and economic development : measuring the impact," Policy Research Working Paper Series 2988, The World Bank.
  6. Feenstra, Robert C, 2002. "Border Effects and the Gravity Equation: Consistent Methods for Estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 491-506, December.
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  11. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476.
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  14. Wilson, John S. & Mann, Catherine L. & Otsuki, Tsunehiro, 2004. "Assessing the potential benefit of trade facilitation : A global perspective," Policy Research Working Paper Series 3224, The World Bank.
  15. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  16. Thierry Mayer & Keith Head, 2002. "Illusory Border Effects: Distance Mismeasurement Inflates Estimates of Home Bias in Trade," Working Papers 2002-01, CEPII research center.
  17. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
  18. Keith Head & Thierry Mayer, 2001. "Effet frontière, intégration économique et "Forteresse Europe"," Working Papers 2001-06, CEPII research center.
  19. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  20. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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Cited by:
  1. Saslavsky, Daniel & Shepherd, Ben, 2012. "Facilitating international production networks : the role of trade logistics," Policy Research Working Paper Series 6224, The World Bank.

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