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Exports and international logistics

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Author Info

  • Behar, Alberto
  • Manners, Phil
  • Nelson, Benjamin

Abstract

Do better international logistics reduce trade costs, raising a developing country's exports? Yes, but the magnitude of the effect depends on the country's size. The authors apply a gravity model that accounts for firm heterogeneity and multilateral resistance to a comprehensive new international logistics index. A one-standard deviation improvement in logistics is equivalent to a 14 percent reduction in distance. An average-sized developing country would raise exports by about 36 percent. Most countries are much smaller than average however, so the typical effect is 8 percent. This difference is chiefly due to multilateral resistance: it is bilateral trade costs relative to multilateral trade costs that matter for bilateral exports, and multilateral resistance is more important for small countries.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5691.

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Date of creation: 01 Jun 2011
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Handle: RePEc:wbk:wbrwps:5691

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Keywords: Economic Theory&Research; Free Trade; Trade Policy; Common Carriers Industry; Trade Law;

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References

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  1. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  2. Marilyne Huchet-Bourdon & Anna Lipchitz & Audrey Rousson, 2009. "Aid for Trade in Developing Countries: Complex Linkages for Real Effectiveness," African Development Review, African Development Bank, African Development Bank, vol. 21(2), pages 243-290.
  3. Portugal-Perez, Alberto & Wilson, John S., 2012. "Export Performance and Trade Facilitation Reform: Hard and Soft Infrastructure," World Development, Elsevier, Elsevier, vol. 40(7), pages 1295-1307.
  4. Bernard, Andrew & Jensen, J Bradford & Redding, Stephen J & Schott, Peter, 2007. "Firms in International Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6277, C.E.P.R. Discussion Papers.
  5. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(2), pages 441-487, 05.
  6. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
  7. John S. Wilson & Catherine L. Mann & Tsunehiro Otsuki, 2005. "Assessing the Benefits of Trade Facilitation: A Global Perspective," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 28(6), pages 841-871, 06.
  8. Jacques Melitz, 2003. "Language and Foreign Trade," Working Papers, Centre de Recherche en Economie et Statistique 2003-26, Centre de Recherche en Economie et Statistique.
  9. Alberto Behar & Benjamin D. Nelson, 2009. "Trade Flows, Multilateral Resistance and Firm Heterogeneity," Economics Series Working Papers, University of Oxford, Department of Economics 440, University of Oxford, Department of Economics.
  10. Simeon Djankov & Caroline Freund & Cong S. Pham, 2010. "Trading on Time," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 166-173, February.
  11. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, American Economic Association, vol. 85(3), pages 615-23, June.
  12. Tony Venables & Alberto Behar, 2010. "Transport Costs and International Trade," Economics Series Working Papers, University of Oxford, Department of Economics 488, University of Oxford, Department of Economics.
  13. Kalina Manova, 2008. "Credit Constraints, Heterogeneous Firms, and International Trade," NBER Working Papers 14531, National Bureau of Economic Research, Inc.
  14. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, American Economic Association, vol. 98(4), pages 1707-21, September.
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Cited by:
  1. Alberto Behar & Benjamin D. Nelson, 2009. "Trade Flows, Multilateral Resistance and Firm Heterogeneity," Economics Series Working Papers, University of Oxford, Department of Economics 440, University of Oxford, Department of Economics.
  2. Saslavsky, Daniel & Shepherd, Ben, 2012. "Facilitating international production networks : the role of trade logistics," Policy Research Working Paper Series 6224, The World Bank.
  3. Murat Genç & David Law, 2014. "A Gravity Model of Barriers to Trade in New Zealand," Treasury Working Paper Series 14/05, New Zealand Treasury.

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