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Moving forward faster : trade facilitation reform and Mexican competitiveness

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Author Info

  • Soloaga, Isidro
  • Wilson, John S.
  • Mejia, Alejandro

Abstract

Improved competitiveness is at the top of the agenda for Mexico as it moves to leverage economic progress made over the past decade. The authors evaluate the impact of changes in trade facilitation measures on trade for main industrial sectors in Mexico. They use four indicators of trade facilitation: port efficiency, customs environment, regulatory environment, and e-commerce use by business (as a proxy for service sector infrastructure). The authors use gravity model results to consider how much trade among countries might be increased under various scenarios of improved trade facilitation. They follow a simulation strategy that uses a formula to design a unique program of reform for each country in the sample, and apply it to the case of Mexico. The formula brings the below-average countries in the group half-way to the average for the entire set of countries. After simulating these improvements in trade facilitation in all four areas, the authors find that the total increase in trade flow in manufacturing goods is estimated to be $348.2 billion (about 7.4 percent of total world trade). The analysis indicates that Mexico has a large scope for trade promotion from trade facilitation reform: overall increments from domestic reforms are expected to be on the order of $31.8 billion, equivalent to 22.4 percent of total Mexican manufacturing exports for 2000-03. On the imports side, these figures are $17.1 billion and 11.2 percent, respectively. In total exports as well as in textiles, increases in exports result from improvements in port efficiency and the regulatory environment (that is, the perception of corruption). In turn, exports of transport equipment are expected to get a greater increment from improvements in port efficiency, whereas exports of food and machinery seem to be more related to improvements in the regulatory environment. On the imports side, Mexican improvements in port efficiency appear to be the most important factor, although for imports of transport equipment improvements in service sector infrastructure are also of relative importance.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3953.

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Date of creation: 01 Jun 2006
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Handle: RePEc:wbk:wbrwps:3953

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Related research

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

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References

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Citations

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Cited by:
  1. Persson, Maria, 2008. "Trade Facilitation and the Extensive and Intensive Margins of Trade," Working Papers 2008:13, Lund University, Department of Economics.
  2. Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada & Suárez-Burguet, Celestino, 2012. "Trade policy versus trade facilitation: An application using good old OLS," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(11), pages 1-38.
  3. Chris Milner & Oliver Morrissey & Evious Zgovu, . "Trade Facilitation in Developing Countries," Discussion Papers 08/05, University of Nottingham, CREDIT.
  4. Inmaculada Martínez-Zarzoso & Laura Márquez-Ramos, 2007. "The Effect of Trade Facilitation on Sectoral Trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 167, Ibero-America Institute for Economic Research.
  5. Persson, Maria, 2007. "Trade Facilitation and the EU-ACP Economic Partnership Agreements: Who Has the Most to Gain?," Working Papers 2007:8, Lund University, Department of Economics, revised 01 Oct 2007.
  6. Persson, Maria, 2010. "Trade Facilitation and the Extensive Margin," Working Paper Series 828, Research Institute of Industrial Economics.
  7. Vaqar, Ahmed & Ghulam, Samad, 2011. "Trade facilitation for economic corridors in South Asia: the perspective of Pakistan," MPRA Paper 31368, University Library of Munich, Germany.
  8. Persson, Maria, 2011. "From trade preferences to trade facilitation: Taking stock of the issues," Economics Discussion Papers 2011-23, Kiel Institute for the World Economy.
  9. Helble, Matthias & Mann, Catherine & Wilson, John S., 2009. "Aid for trade facilitation," Policy Research Working Paper Series 5064, The World Bank.
  10. Shepherd, Ben & Wilson, John S., 2006. "Road infrastructure in Europe and Central Asia : does network quality affect trade ?," Policy Research Working Paper Series 4104, The World Bank.
  11. Florian Mölders & Ulrich Volz, 2011. "Trade creation and the status of FTAs: empirical evidence from East Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 147(3), pages 429-456, September.

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