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Assessing the potential benefit of trade facilitation : A global perspective

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Author Info
Wilson, John S.
Mann, Catherine L.
Otsuki, Tsunehiro

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Abstract

The relationships between trade facilitation, trade flows, and capacity building are complex and challenging to assess, both empirically and in implementation. The authors measure and estimate the relationship between trade facilitation and trade flows across 75 countries in global trade, considering four important categories: port efficiency, customs environment, regulatory environment, and service sector infrastructure. A gravity model is employed that accounts for bilateral trade flows in manufactured goods in 2000-01 between the 75 countries, using traditional factors such as GDP, distance, language, and trade areas, and is augmented by the trade facilitation measures in the four categories for each country. The results suggest that both imports and exports for a country and for the world will increase with improvements in these trade facilitation measures. Potential gains from trade facilitation reforms are predicted by using the estimated parameters. The gains from trade facilitation are presented by comparing the gains across geographical regions and trade facilitation categories, and by domestic and partner improvements. The total gain in trade flow in manufacturing goods from trade facilitation improvements in all the four areas is estimated to be $377 billion. All regions gain in imports and exports. Most regions gain more in terms of exports than imports, in large part through increasing exports to the OECD market. The most important ingredient in getting these gains, particularly to the OECD market, is the country's own trade facilitation efforts. The detailed presentation of the results of the analysis may help inform policy decisions and capacity building choices.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3224.

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Date of creation: 01 Feb 2004
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Handle: RePEc:wbk:wbrwps:3224

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Related research
Keywords: Transport and Trade Logistics; Trade Policy; Economic Theory&Research; Common Carriers Industry; Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Common Carriers Industry; Transport and Trade Logistics; Trade Policy; Environmental Economics&Policies;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hummels, David, 2001. "Time as a Trade Barrier," GTAP Working Papers 1152, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
  2. 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. [Downloadable!]
  3. 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. [Downloadable!]
  4. Carsten Fink & Aaditya Mattoo & Ileana Cristina Neagu, 2002. "Trade in International Maritime Services: How Much Does Policy Matter?," World Bank Economic Review, Oxford University Press, vol. 16(1), pages 81-108, June.
    Other versions:
  5. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March. [Downloadable!]
    Other versions:
  6. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series 2615, The World Bank. [Downloadable!]
    Other versions:
  7. 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, vol. 39(1), pages 247-265, February. [Downloadable!] (restricted)
  8. Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Caroline L. Freund & Diana Weinhold, 2000. "On the effect of the Internet on international trade," International Finance Discussion Papers 693, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  10. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
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  12. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
  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, vol. 26(5), pages 495-514, October. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Prabir De & Abdur Rob Khan & Sachin Chaturvedi, 2008. "Transit and Trade Barriers in Eastern South Asia: A Review of the Transit Regime and Performance of Strategic Border-Crossings," Working Papers 5608, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada.. [Downloadable!]
  2. Pomfret, Richard, 2007. "Distortions to Agricultural Incentives in Kazakhstan," Agricultural Distortions Working Paper 48360, World Bank. [Downloadable!]
  3. Jeevika Weerahewa, 2009. "Impact of Trade Facilitation Measures and Regional Trade Agreements on Food and Agricultural Tarde in South Asia," Working Papers 6909, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada.. [Downloadable!]
  4. Joseph F. Francois & Miriam Manchin, 2007. "Institutions, infrastructure, and trade," Economics working papers 2007-05, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
    Other versions:
  5. Chris Milner & Oliver Morrissey & Evious Zgovu, . "Trade Facilitation in Developing Countries," Discussion Papers 08/05, University of Nottingham, CREDIT. [Downloadable!]
  6. Djankov, Simeon & Freund, Caroline & Pham, Cong S., 2006. "Trading on time," Policy Research Working Paper Series 3909, The World Bank. [Downloadable!]
  7. Yann Duval, 2006. "Cost and Benefits of Implementing Trade Facilitation Measures under Negotiations at the WTO: an Exploratory Survey," Working Papers 306, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada.. [Downloadable!]
  8. Alessandro Olper & Valentina Raimondi, 2007. "Patterns and Determinants of International Trade Costs in the Food Industry," LICOS Discussion Papers 18807, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
    Other versions:
  9. Suwa Eisenmann, Akiko & Verdier, Thierry, 2007. "Aid and Trade," CEPR Discussion Papers 6465, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Wilson, John S. & Otsuki, Tsunehiro, 2007. "Regional integration in South Asia : what role for trade facilitation ?," Policy Research Working Paper Series 4423, The World Bank. [Downloadable!]
  11. Yann Duval & Chorthip Utoktham, 2009. "Behind the Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence," Working Papers 6709, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada.. [Downloadable!]
  12. Azim M. Sadikov, 2007. "Border and Behind-the-Border Trade Barriers and Country Exports," IMF Working Papers 07/292, International Monetary Fund. [Downloadable!]
  13. Hausman, Warren H. & Lee, Hau L. & Subramanian, Uma, 2005. "Global logistics indicators, supply chain metrics, and bilateral trade patterns," Policy Research Working Paper Series 3773, The World Bank. [Downloadable!]
  14. Kaminski, Bartlomiej, 2006. "Bulgaria's institutions and policies : integrating into Pan-European markets," Policy Research Working Paper Series 3864, The World Bank. [Downloadable!]
  15. Debapriya Bhattacharya & Syen Saifuddin Hossain, 2006. "An Evaluation of the Need and Cost of Selected Trade Facilitation Measures in Bangladesh: Implications for the WTO Negotiations on Trade Facilitation," Working Papers 906, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada.. [Downloadable!]
  16. Tomasz Iwanow & Colin Kirkpatrick, 2007. "Trade facilitation, regulatory quality and export performance," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(6), pages 735-753. [Downloadable!]
  17. 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. [Downloadable!]
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