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The Impact of Trade Costs on Exports: An Empirical Modelling

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  • Imran Ullah Khan
  • Kaliappa Kalirajan

    ()

Abstract

Studies, which have discussed some of the important issues concerning the measurement of trade costs, have conceded that the literature is still in the early stages of understanding and measuring what the real costs are. It is in this context, decomposing trade costs into 'natural' costs, 'behind the border' costs, 'explicit beyond the border' costs, and 'implicit beyond the border' costs, this paper suggests a method to measure the impacts of these components on changes in exports between countries in the absence of complete information on all the components of trade costs in home and partner countries. Empirical measurement has been demonstrated using 1999 and 2004 trade data from Pakistan. The results show that Pakistan's export growth between 1999 and 2004 came mainly from the reduction in both 'explicit and implicit beyond the border' trade costs in partner countries.

Suggested Citation

  • Imran Ullah Khan & Kaliappa Kalirajan, 2011. "The Impact of Trade Costs on Exports: An Empirical Modelling," ASARC Working Papers 2011-07, The Australian National University, Australia South Asia Research Centre.
  • Handle: RePEc:pas:asarcc:2011-07
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    References listed on IDEAS

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    Cited by:

    1. Gani, Azmat & Clemes, Michael D., 2016. "Does the strength of the legal systems matter for trade in insurance and financial services?," Research in International Business and Finance, Elsevier, vol. 36(C), pages 511-519.
    2. Santana-Gallego, María & Ledesma-Rodríguez, Francisco J. & Pérez-Rodríguez, Jorge V., 2016. "International trade and tourism flows: An extension of the gravity model," Economic Modelling, Elsevier, vol. 52(PB), pages 1026-1033.
    3. Kundu, Nobinkhor, 2015. "Bilateral Trade Balance of Bangladesh with BRICS Countries: A Static Panel Data Analysis," MPRA Paper 66091, University Library of Munich, Germany, revised 03 Aug 2015.
    4. Nguyen, Van Son & Kalirajan, Kaliappa, 2016. "Export of environmental goods: India's potential and constraints," Environment and Development Economics, Cambridge University Press, pages 158-179.
    5. Md Rajibul Ahsan & Son Ngoc Chu, 2014. "The Potential and Constraints of the Exports of Environmental Goods (EGs): the case of Bangladesh," ASARC Working Papers 2014-05, The Australian National University, Australia South Asia Research Centre.
    6. repec:ejn:ejefjr:v:5:y:2017:i:4:p:1-15 is not listed on IDEAS
    7. Gani, Azmat & Al Mawali, Nasser Rashid, 2013. "Oman's trade and opportunities of integration with the Asian economies," Economic Modelling, Elsevier, vol. 31(C), pages 766-774.
    8. Abu Ayob & Shamshubaridah Ramlee & Aisyah Abdul Rahman, 2015. "Financial factors and export behavior of small and medium-sized enterprises in an emerging economy," Journal of International Entrepreneurship, Springer, vol. 13(1), pages 49-66, March.
    9. Disdier, Anne‐Célia & Emlinger, Charlotte & Fouré, Jean, 2016. "Interdependencies between Atlantic and Pacific agreements: Evidence from agri-food sectors," Economic Modelling, Elsevier, vol. 55(C), pages 241-253.
    10. Vinícios Poloni Sant' Anna & Sérgio Kannebley Júnior, 2016. "Port Efficiency And Brazilian Exports: A Quantitative Assessment Of The Impact Of Port Procedures Time," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 125, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Gani, Azmat & Clemes, Michael D., 2013. "Modeling the effect of the domestic business environment on services trade," Economic Modelling, Elsevier, vol. 35(C), pages 297-304.
    12. Theresa Chaudhry & Muhammad Haseeb, 2014. "Exporters in Pakistan and Firms Who Do Not Export: What’s the Big Difference?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 207-246, September.
    13. Lee, Youngjae & Kennedy, Lynn, 2016. "Asymmetric Trade Flows and Their Implication for Competitiveness, Efficiency and Trade," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235427, Agricultural and Applied Economics Association.
    14. Halit Yanikkaya & Zeynep Aktas Koral, 2017. "Assessing the Determinants of Customs-Related Transaction Costs in Turkey," Working Papers 2017-02, Gebze Technical University, Department of Economics.

    More about this item

    Keywords

    trade costs; export growth decomposition; behind the border costs; beyond the border costs; Pakistan;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F19 - International Economics - - Trade - - - Other

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