Trade facilitation, regulatory quality and export performance

The objective of this paper is to quantify the potential gains in trade performance from the implementation of trade facilitation reform. The study applies a gravity model augmented with trade facilitation, regulatory quality and infrastructure indicators to assess the impact of trade facilitation and other trade-related constraints on export performance. Quantitatively, our results suggest that a 10 per cent improvement in trade facilitation would yield an increase in exports of about 5 per cent. Identical percentage improvements in the regulatory environment and in the quality of infrastructure provision would result in increases of 9-11 per cent and 8 per cent, respectively. The results confirm that while trade facilitation can contribute to improved export performance, improvements in the quality of the regulatory environment and the basic transport and communications infrastructure are equally or more important, in facilitating export growth. The conclusion is that trade facilitation alone is unlikely to result in a significant improvement in export performance. Copyright © 2007 John Wiley & Sons, Ltd.