Does Trade Facilitation Matter in Bilateral Trade?

This paper estimates an augmented gravity model incorporating different aspects of trade facilitation in developed and developing countries. Trade facilitation is defined as measures that aim at making international trade easier by eliminating administrative delays, simplifying commercial procedures, increasing transparency, security and the place of new technologies in trade. This paper provides new theoretical and empirical enhancements. On the one hand, the model is based on theoretical foundations related to monopolistic competition and border effects. The originality of this paper is that trade facilitation facets are included in the model. On the other hand, the empirical achievement of the paper is that it uses different databases allowing us to take into account many features of trade facilitation. I use several databases coming from different sources: Doing Business (World Bank) and Institutional Profiles (CEPII). My main findings show that transaction time for imports and the number of documents for exports have a negative impact on trade. Our sample is split into sub-samples in order to take into account the impact of development level. It turns out that trade facilitation aspects have not the same impact on developed and developing countries. Finally, we conclude that some perishable (food and beverages), seasonal (wearing apparels) and high-value added products are more sensitive to import time than other products. Hard industries are rather sensitive to export documents.