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The Effect of Trade Facilitation on Sectoral Trade

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  • Inmaculada Martínez-Zarzoso

    ()
    (Ibero-Amerika Institut für Wirtschaftsfoschung, Georg-August Universität Göttingen / Germany)

  • Laura Márquez-Ramos

    (Instituto de Economía Internacional, Castellón / Spain)

Abstract

This paper aims to analyse the effect of trade facilitation on sectoral trade flows. We use data from the World Bank’s Doing Business Database on the fees associated with completing the procedures to export or import goods in a country, on the number of documents needed and on the required time to complete all the administrative procedures to import and export. An augmented gravity equation is estimated for 13 exporters and 167 importers using a number of estimation techniques, namely OLS, PPML and the Harvey model. A common result is that trade flows increase by lowering transport costs and the number of days required to trade. The outcome supports multilateral initiatives, as that in the WTO, which encourages countries to assess their trade facilitation needs and priorities and to improve them. The measures adopted will not only benefit the country that improves trade facilitation, but also its trading partners.

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Bibliographic Info

Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 167.

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Length: 42 pages
Date of creation: 06 Dec 2007
Date of revision:
Handle: RePEc:got:iaidps:167

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Keywords: gravity model; trade facilitation; time; trade cost;

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References

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  1. I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 49-63.
  2. Joao Santos Silva & Silvana Tenreyro, 2005. "The Log of Gravity," CEP Discussion Papers dp0701, Centre for Economic Performance, LSE.
  3. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
  4. John S. Wilson & Catherine L. Mann & Tsunehiro Otsuki, 2003. "Trade Facilitation and Economic Development: A New Approach to Quantifying the Impact," World Bank Economic Review, World Bank Group, vol. 17(3), pages 367-389, December.
  5. Andrei A. Levchenko, 2007. "Institutional Quality and International Trade," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 791-819.
  6. Inmaculada Martínez-Zarzoso & Laura Márquez-Ramos, 2005. "Does Technology Foster Trade? Empirical Evidence for Developed and Developing Countries," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(1), pages 55-69, March.
  7. Dennis, Allen, 2006. "The impact of regional trade agreements and trade facilitation in the Middle East and North Africa region," Policy Research Working Paper Series 3837, The World Bank.
  8. John S. Wilson & Catherine L. Mann & Tsunehiro Otsuki, 2005. "Assessing the Benefits of Trade Facilitation: A Global Perspective," The World Economy, Wiley Blackwell, vol. 28(6), pages 841-871, 06.
  9. Michael Engman, 2005. "The Economic Impact of Trade Facilitation," OECD Trade Policy Papers 21, OECD Publishing.
  10. Soloaga, Isidro & Wilson, John S. & Mejia, Alejandro, 2006. "Moving forward faster : trade facilitation reform and Mexican competitiveness," Policy Research Working Paper Series 3953, The World Bank.
  11. Djankov, Simeon & Freund, Caroline & Pham, Cong S., 2006. "Trading on time," Policy Research Working Paper Series 3909, The World Bank.
  12. Yvan Decreux & Lionel Fontagné, 2006. "A Quantitative Assessment of the Outcome of the Doha Development Agenda," Working Papers 2006-10, CEPII research center.
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Citations

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Cited by:
  1. Maria Persson, 2013. "Trade facilitation and the extensive margin," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(5), pages 658-693, August.
  2. Liu, Lan & Yue, Chengyan, 2013. "Investigating the impacts of time delays on trade," Food Policy, Elsevier, vol. 39(C), pages 108-114.
  3. Nguyen, Cuong, 2013. "Poverty, Inequality and Trade Facilitation in Low and Middle Income Countries," MPRA Paper 50312, University Library of Munich, Germany.
  4. Hoekman, Bernard & Shepherd, Ben, 2013. "Who Profits from Trade Facilitation Initiatives?," CEPR Discussion Papers 9490, C.E.P.R. Discussion Papers.
  5. Christodoulopoulou, Styliani, 2010. "THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade," MPRA Paper 29169, University Library of Munich, Germany.
  6. Bourdet, Yves & Persson, Maria, 2011. "Reaping the Benefits of Deeper Euro-Med Integration Through Trade Facilitation," Working Paper Series 881, Research Institute of Industrial Economics.
  7. Ying Yi Tsai, 2010. "Strategic Choice of Freight Mode and Investments in Transport Infrastructure within Production Networks," Working Papers id:3083, eSocialSciences.
  8. Brooks, Douglas H. & Stone, Susan F., 2010. "Accelerating Regional Integration: Issues at the Border," ADBI Working Papers 200, Asian Development Bank Institute.
  9. Persson, Maria & Bourdet, Yves, 2010. "Completing the EU Customs Union. The Effects of Trade Procedure Harmonization," Working Paper Series 848, Research Institute of Industrial Economics.
  10. Persson, Maria, 2008. "Trade Facilitation and the Extensive and Intensive Margins of Trade," Working Papers 2008:13, Lund University, Department of Economics.

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