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Why Trade Costs Matter?

Author

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  • Prabir De

    (Research and Information System Developing Countries)

Abstract

Trade costs are often cited as an important determinant of the volume of trade. A growing literature has documented the negative impact of trade costs on the volume of trade. Most of these studies show that integration is the resultant of reduced costs of transportation in particular and other infrastructure services in general. Direct evidence on border costs shows that tariff barriers are now low in most countries across the world. Poor institutions and poor infrastructure penalize trade, differentially across countries. Therefore, today’s trade strategy goes beyond the traditional mechanisms of tariffs and quotas and includes “behind-the-border” issues, such as the role of infrastructure and governance in supporting a well-functioning trading economy.

Suggested Citation

  • Prabir De, 2006. "Why Trade Costs Matter?," Working Papers 706, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    • Handle: RePEc:esc:wpaper:706
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    File URL: http://www.unescap.org/tid/artnet/pub/wp706.pdf
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    References listed on IDEAS

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    1. Nordås, Hildegunn Kyvik & Piermartini, Roberta, 2004. "Infrastructure and trade," WTO Staff Working Papers ERSD-2004-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Alan V. Deardorff, 2011. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 24, pages 267-293, World Scientific Publishing Co. Pte. Ltd..
    3. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    4. Bougheas, Spiros & Demetriades, Panicos O. & Morgenroth, Edgar L. W., 1999. "Infrastructure, transport costs and trade," Journal of International Economics, Elsevier, vol. 47(1), pages 169-189, February.
    5. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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    Citations

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    Cited by:

    1. Krzysztof Kosiec, 2016. "Liberalisation of International Trade – The Case of Asymmetric Countries," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 8(3), pages 143-160, September.
    2. Khan, Imran Ullah & Kalirajan, Kaliappa, 2011. "The impact of trade costs on exports: An empirical modeling," Economic Modelling, Elsevier, vol. 28(3), pages 1341-1347, May.
    3. Eric Tremolada Álvarez, 2018. "La Cooperación Internacional como alternativa a los unilateralismos. colección Ius Cogens n.° 6," Books, Universidad Externado de Colombia, Facultad de Derecho, number 1037, October.
    4. Haider A. Khan, 2006. "Soft Infrastructure, Trading Costs and Regional Co-operation ," CIRJE F-Series CIRJE-F-457, CIRJE, Faculty of Economics, University of Tokyo.
    5. repec:unt:escsti:sti84 is not listed on IDEAS

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    More about this item

    Keywords

    Trade Costs; Trade Facilitation;

    JEL classification:

    • F1 - International Economics - - Trade

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