Trade Facilitation and Country Size

Amin, Mohammad and Haidar, Jamal Ibrahim (2014): Trade Facilitation and Country Size. Published in: Empirical Economics , Vol. 4, No. 47 (30 December 2014): pp. 1441-1466.

Abstract

It is argued that compared with large countries, small countries rely more on trade and therefore they are more likely to adopt liberal trading policies. The present paper extends this idea beyond the conventional trade openness measures by analyzing the relationship between country size and the number of documents required to export and import, a measure of trade facilitation. Three important results follow. First, trade facilitation does improve as the country size becomes smaller; that is, small countries perform better than large countries in terms of trade facilitation. Second, the relationship between country size and trade facilitation is non-linear, much stronger for the relatively small than the large countries. Third, contrary to what the existing studies might suggest, the relationship between country size and trade facilitation does not appear to be driven by the fact that small countries trade more as a proportion of their GDP than the large countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Country size, Trade facilitation, Openness
• Subjects: F - International Economics > F1 - Trade > F10 - General; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F5 - International Relations, National Security, and International Political Economy; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F50 - General; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F55 - International Institutional Arrangements; H - Public Economics > H1 - Structure and Scope of Government > H10 - General; K - Law and Economics > K0 - General > K00 - General; L - Industrial Organization > L5 - Regulation and Industrial Policy; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy

References

Alesina, Alberto and Romain Wacziarg (1998), “Openness, Country Size and Government,” Journal of Public Economics, 69(3): 305-321.

Alesina, Alberto (2002), “The Size of Countries: Does It Matter?” Harvard Institute of Economic Research, Discussion Paper No. 1975, Harvard University, Cambridge, Massachusetts.

Alesina, Alberto and E. Spolaore (2003), The Size of Nations, MIT Press, Cambridge.

Amin, Mohammad and Jamal Ibrahim Haidar (2012), “The cost of registering property: does legal origin matter?,” Empirical Economics, 42(3): 1035-1050.

Djankov, Simeon, Caroline Freund and Cong S. Pham (2010), “Trading On Time,” Review of Economics and Statistics, 92(1): 166-173.

Freund, Caroline and Diana Weinhold (2002), “The Internet and International Trade in Services,” American Economic Review, 92(2): 236-240.

Haidar, Jamal Ibrahim (2009), “Investor protections and economic growth,” Economics Letters, 103(1): 1-4.

Haidar, Jamal Ibrahim (2012), “The Impact of Business Regulatory Reforms on Economic Growth,” Journal of the Japanese and International Economies, 26(3): 285-307.

Hertel, Thomas W., Terrie Walmsley and Ken Itakura (2001), “Dynamic Effect of the “New Age" Free Trade Agreement between Japan and Singapore,” Journal of Economic Integration, 16(4): 446-84.

La Porta, Rafael, Florencio Lopez-de Silanes, Andrei Shleifer and Robert Vishny (1999), “The Quality of Government,” Journal of Law, Economics and Organization, 15(1): 222-79.

La Porta, Rafael, Florencio Lopez-de Silanes and Andrei Shleifer (2008), “The Economic Consequences of Legal Origins,” Journal of Economic Literature, 46(2), pp. 285-332.

Root, Hilton (1999), “The Importance of Being Small,” Unpublished manuscript.

Rose, Andrew (2006), “Size Really Doesn’t Matter: In Search for a National Scale Effect,” Journal of the Japanese and International Economies, 20(4): 482-507.

Schwarz, Peter (2007), “Does Capital Mobility Reduce the Corporate-Labor Tax Ratio?” Public Choice, 130: 363-380.

Wilson, John S., Catherine L. Mann and Tsunehiro Otsuki (2003), “Trade Facilitation and Economic Development: A New Approach to Quantifying the Impact,” World Bank Economic Review, 17(3): 367-389.