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Trade Costs, Time, and Supply Chain Reliability

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  • Utsav Kumar
  • Ben Shepherd
  • Roselle Dime

Abstract

This paper uses measures of international transport time, in median and standard deviation, based on shipment-level data from the Universal Postal Union, to analyze the effect of time on trade costs. The paper finds robust evidence that median shipping times increase trade costs by a substantial amount. The evidence for uncertainty, as measured by the standard deviation of shipment time, is contrary to expectations, likely due to problems recording data on the ground. It also analyzes the determinants of shipping times and finds that geographical distance is the most reliable indicator of median time and uncertainty, with logistics performance, as measured by the World Bank’s Logistics Performance Index, also playing a role in determining shipment times. South Asia Subregional Economic Cooperation countries could benefit from investing additional resources in improving connectivity and thereby reducing transport times and increasing reliability to major markets.

Suggested Citation

  • Utsav Kumar & Ben Shepherd & Roselle Dime, 2018. "Trade Costs, Time, and Supply Chain Reliability," Working Papers id:12826, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12826
    Note: Institutional Papers
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    References listed on IDEAS

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    1. Anson, José & Boffa, Mauro & Helble, Matthias, 2014. "A Short-Run Analysis of Exchange Rates and International Trade with an Application to Australia, New Zealand, and Japan," ADBI Working Papers 471, Asian Development Bank Institute.
    2. Russell Hillberry & Xiaohui Zhang, 2018. "Policy and performance in customs: Evaluating the trade facilitation agreement," Review of International Economics, Wiley Blackwell, vol. 26(2), pages 438-480, May.
    3. 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.
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