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Global logistics indicators, supply chain metrics, and bilateral trade patterns

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Author Info
Hausman, Warren H.
Lee, Hau L.
Subramanian, Uma
Abstract

Past research into the determinants of international trade highlighted the importance of the basic spatial gravity model augmented by additional variables representing sources of friction. Studies modeled many sources of friction using various proxies, including indices based on expert judgment in some cases. This paper focuses on logistics friction and draws on a data set recently compiled by the World Bank with specific quantitative metrics of logistics performance interms of time, cost, and variability in time. It finds that the new variables that relate directly to logistics performance have a statistically significant relationship with the level of bilateral trade. It also finds that a single logistics index can capture virtually all of the explanatory power of multiple logistics indicators. The findings should spur public and private agencies that have direct or indirect power over logistics performance to focus attention on reducing sources of friction so as to improve their country's ability to compete in today's global economy. Moreover, since the logistics metrics are directly related to operational performance, countries can use these metrics to target actions to improve logistics and monitor their progress.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3773.

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Date of creation: 01 Nov 2005
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Handle: RePEc:wbk:wbrwps:3773

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Keywords: Common Carriers Industry; Transport and Trade Logistics; Economic Theory&Research; Free Trade; Trade Policy;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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.:
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  5. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May. [Downloadable!] (restricted)
  6. Ximena Clark & David Dollar & Alejandro Micco, 2004. "Port Efficiency, Maritime Transport Costs and Bilateral Trade," NBER Working Papers 10353, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. James E. Anderson & Douglas Marcouiller, 2002. "Insecurity And The Pattern Of Trade: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 342-352, May. [Downloadable!] (restricted)
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  8. 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. [Downloadable!]
  9. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate Of The Effect Of Common Currencies On Trade And Income," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 437-466, May. [Downloadable!] (restricted)
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  10. 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. [Downloadable!] (restricted)
  11. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2004. "Investment climate and international integration," Policy Research Working Paper Series 3323, The World Bank. [Downloadable!]
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  12. I-Hui Cheng & Howard J. Wall, 2004. "Controlling for heterogeneity in gravity models of trade and integration," Working Papers 1999-010, Federal Reserve Bank of St. Louis. [Downloadable!]
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  13. Lee, Hau L. & Whang, Seungjin, 2005. "Higher supply chain security with lower cost: Lessons from total quality management," International Journal of Production Economics, Elsevier, vol. 96(3), pages 289-300, June. [Downloadable!] (restricted)
  14. 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)
  15. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank. [Downloadable!]
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(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. Yoshino, Yutaka, 2008. "Domestic constraints, firm characteristics, and geographical diversification of firm-level manufacturing exports in Africa," Policy Research Working Paper Series 4575, The World Bank. [Downloadable!]
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