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Trade costs in the developing world : 1995 - 2010

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  • Arvis, Jean-François
  • Duval, Yann
  • Shepherd, Ben
  • Utoktham,Chorthip

Abstract

The authors use newly collected data on trade and production in 178 countries to infer estimates of trade costs in agriculture and manufactured goods for the 1995-2010 period. The data show that trade costs are strongly declining in per capita income. Moreover, the rate of change of trade costs is largely unfavorable to the developing world: trade costs are falling noticeably faster in developed countries than in developing ones, which serves to increase the relative isolation of the latter. In particular, Sub-Saharan African countries and low-income countries remain subject to very high levels of trade costs. In terms of policy implications, the analysis finds that maritime transport connectivity and logistics performance are very important determinants of bilateral trade costs: in some specifications, their combined effect is comparable to that of geographical distance. Traditional and non-traditional trade policies more generally, including market entry barriers and regional integration agreements, play a significant role in shaping the trade costs landscape.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6309.

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Date of creation: 01 Jan 2013
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Handle: RePEc:wbk:wbrwps:6309

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Keywords: Economic Theory&Research; Free Trade; Emerging Markets; Trade Law; Trade Policy;

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References

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  1. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 441-487, 05.
  2. Arvis, Jean-Francois & Shepherd, Ben, 2011. "The Poisson quasi-maximum likelihood estimator: A solution to the “adding up” problem in gravity models," MPRA Paper 34334, University Library of Munich, Germany.
  3. 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.
  4. Dennis Novy, 2012. "Gravity Redux: Measuring International Trade Costs with Panel Data," CEP Discussion Papers dp1114, Centre for Economic Performance, LSE.
  5. Przemyslaw Kowalski & Ben Shepherd, 2006. "South-South Trade In Goods," OECD Trade Policy Papers 40, OECD Publishing.
  6. Chen, Natalie & Novy, Dennis, 2011. "Gravity, trade integration, and heterogeneity across industries," Journal of International Economics, Elsevier, vol. 85(2), pages 206-221.
  7. De Sousa, Jose, 2011. "The currency union effect on trade is decreasing over time," MPRA Paper 35448, University Library of Munich, Germany.
  8. Borchert, Ingo & Gootiiz, Batshur & Grover, Arti & Mattoo, Aaditya, 2012. "Landlocked or policy locked ? how services trade protection deepens economic isolation," Policy Research Working Paper Series 5942, The World Bank.
  9. Arvis, Jean-François & Shepherd, Ben, 2011. "The air connectivity index : measuring integration in the global air transport network," Policy Research Working Paper Series 5722, The World Bank.
  10. Miroudot, Sébastien & Sauvage, Jehan & Shepherd, Ben, 2010. "Measuring the Cost of International Trade in Services," MPRA Paper 27655, University Library of Munich, Germany.
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Cited by:
  1. repec:dgr:unumer:2013035 is not listed on IDEAS
  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. Kilolo, Jean-Marc Malambwe, 2013. "Country size, trade liberalization and transfers," MPRA Paper 47996, University Library of Munich, Germany.
  4. Arvis, Jean-François & Shepherd, Ben & Reis, José Guilherme & Duval, Yann & Utoktham, Chorthip, 2013. "Trade Costs and Development: A New Data Set," World Bank - Economic Premise, The World Bank, issue 104, pages 1-4, January.
  5. Gebreeyesus, Mulu, 2013. "The end of the multifibre arrangement (MFA) and the heterogeneous performance of quota-constrained countries," MERIT Working Papers 035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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