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The Effects of Transit Systems on International Trade

Author

Listed:
  • Jerónimo Carballo
  • Alejandro Graziano
  • Georg Schaur
  • Christian Volpe Martincus

Abstract

In this paper, we estimate the trade effects of a transit system upgrading that streamlines border processing in developing countries. Our empirical approach combines transaction level export data from El Salvador with unique data that distinguishes export flows that were processed on the transit system. Our results indicate that the new transit system lowered regulatory border costs and raised exports. At the low end, our back-of-the-envelope estimate of the return to investment is US$ 3-to-1. The estimation results also suggest that existing frameworks that emphasize shipping frequency and the formation of new trade relationships are important to interpret trade facilitation policy. This evidence informs an important policy covered by the 2013 WTO Agreement of Trade Facilitation.

Suggested Citation

  • Jerónimo Carballo & Alejandro Graziano & Georg Schaur & Christian Volpe Martincus, 2021. "The Effects of Transit Systems on International Trade," CESifo Working Paper Series 9353, CESifo.
    • Handle: RePEc:ces:ceswps:_9353
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    More about this item

    Keywords

    transit trade; border effects; shipping frequency;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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    This paper has been announced in the following NEP Reports:

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