Poverty, Inequality and Trade Facilitation in Low and Middle Income Countries

Although there are numerous empirical studies on the effect of trade facilitation on international trade and GDP, there have been no studies on the association between trade facilitation and poverty as well as inequality. This paper examines this association in low and middle income countries using GMM-type instruments for trade facilitation. It is found that trade facilitation which is measured by the number of documents and the time for exports and imports is strongly correlated with poverty, inequality and per capita GDP. Countries with more improvement in trade facilitation are more likely to have lower poverty and inequality, and higher per capita GDP than other countries with less improvement in trade facilitation.