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Trade facilitation and economic development : measuring the impact

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  • Wilson,John S.
  • Mann, Catherine L.
  • Otsuki, Tsunehiro

Abstract

The authors analyze the relationship between trade facilitation, trade flows, and GDP per capita in the Asia-Pacific region for the goods sector. They define and measure trade facilitation using four broad indicators. These are constructed using country-specific data for port efficiency, customs environment, regulatory environment, and electronic-business usage. They estimate the relationship between these indicators and trade flows using a gravity model. The model includes tariffs and other standard variables. The authors find that enhanced port efficiency has a large and positive effect on trade. Regulatory barriers deter trade. The results also suggest that improvements in customs and greater electronic-business use significantly expands trade, but to a lesser degree than the effect of ports or regulations. The authors then estimate the benefits of specific trade facilitation efforts by quantifying differential improvement by members of the Asia Pacific Economic Cooperation (APEC) in these four areas. Based on a scenario in which APEC members below average improve capacity halfway to the average for all members, the authors find that intra-APEC trade could increase by $254 billion. This represents approximately a 21 percent increase in intra-APEC trade flows, about halfcoming from improved port efficiencies in the region. Using Dollar and Kraay's estimate of the effect of trade on per capita GDP, these improvements in trade facilitation suggest an increase in APEC average per capita GDP of 4.3 percent.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2988.

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Date of creation: 31 Mar 2003
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Handle: RePEc:wbk:wbrwps:2988

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Related research

Keywords: Transport and Trade Logistics; Trade Policy; Environmental Economics&Policies; Common Carriers Industry; Economic Theory&Research;

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References

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  1. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
  2. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2005. "Assessing the impact of communication costs on international trade," Journal of International Economics, Elsevier, Elsevier, vol. 67(2), pages 428-445, December.
  3. Caroline L. Freund & Diana Weinhold, 2000. "On the effect of the Internet on international trade," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 693, Board of Governors of the Federal Reserve System (U.S.).
  4. Dollar, David & Micco, Alejandro & Clark, Ximena, 2002. "Maritime transport costs and port efficiency," Policy Research Working Paper Series, The World Bank 2781, The World Bank.
  5. Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc.
  6. Tsunehiro Otsuki & John S. Wilson, 2001. "What price precaution? European harmonisation of aflatoxin regulations and African groundnut exports," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(3), pages 263-284, October.
  7. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, American Economic Association, vol. 69(1), pages 106-16, March.
  8. Carsten Fink & Aaditya Mattoo & Ileana Cristina Neagu, 2002. "Trade in International Maritime Services: How Much Does Policy Matter?," World Bank Economic Review, World Bank Group, World Bank Group, vol. 16(1), pages 81-108, June.
  9. Feenstra, Robert & Markusen, James R. & Rose, Andrew K, 1998. "Understanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2035, C.E.P.R. Discussion Papers.
  10. Edward Balistreri & Russell Hillberry, 2006. "Trade frictions and welfare in the gravity model: how much of the iceberg melts?," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 39(1), pages 247-265, February.
  11. Patrick A. Messerlin & Jamel Zarrouk, 2000. "Trade Facilitation: Technical Regulations and Customs Procedures," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 23(04), pages 577-593, 04.
  12. Hertel, Thomas W. & Terrie Walmsley & Ken Itakura, 2001. "Dynamic Effects of the "New Age" Free Trade Agreement between Japan and Singapore," GTAP Working Papers 823, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  13. Otsuki, Tsunehiro & Wilson, John S. & Sewadeh, Mirvat, 2001. "Saving two in a billion: : quantifying the trade effect of European food safety standards on African exports," Food Policy, Elsevier, Elsevier, vol. 26(5), pages 495-514, October.
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