The Impact of Logistics Performance on International Trade: A Comparative Analysis of Lithuania and Turkey Using the Gravity Model

This study investigates the impact of logistics performance on international trade by comparing Lithuania and Turkey within a gravity model framework. Using a bilateral panel dataset of 984 observations covering trade with 26 European Union member states over the period 2007–2025, the study incorporates the six sub-indicators of the World Bank’s Logistics Performance Index (LPI) as explanatory variables. The results confirm that logistics performance significantly influences bilateral trade, but through markedly different channels for the two economies. For Lithuania, the quality and competence of logistics services emerges as the dominant trade-enhancing factor (4.726, p < 0.01), reflecting its position as a small open EU economy. For Turkey, infrastructure quality is the primary driver of trade (2.782, p < 0.01), consistent with its status as a large emerging economy. The Turkey dummy variable becomes statistically insignificant when LPI variables are included, indicating that logistics performance substantially explains the trade differential between the two countries. Export–import disaggregation reveals that imports are more sensitive to logistics dimensions such as timeliness and service quality than exports. Robustness checks using pooled OLS, random effects, and fixed effects estimations, along with the Hausman test, broadly support the baseline findings. The study provides differentiated policy recommendations: Lithuania should prioritize logistics service quality, while Turkey should focus on infrastructure development and customs reform.