How trade facilitation measures influence export orientation? Empirical estimates with logistics performance index data

Chakraborty, Debashis and Mukherjee, Sacchidananda (2016): How trade facilitation measures influence export orientation? Empirical estimates with logistics performance index data.

Abstract

With inception of a comprehensive WTO framework in 1995, while the tariff barriers across Member countries have declined, several procedural and policy-related hassles still continue to obstruct trade flows. To reduce the procedural hassles to export and import flows, from the Cancun Ministerial (2003) onwards, negotiations to reach an agreement on Trade Facilitation (TF) started, which was finally concluded at the Bali Ministerial (2013) meeting of the WTO. The current analysis explores the relationship between TF measures, as reflected from the World Bank Logistics Performance Index (LPI), and export orientation (export as percentage of GDP) during four years, namely 2007, 2010, 2012 and 2014. The empirical results underline the difference in the influence of TF on export orientation in higher-income and lower-income countries. It is concluded that there is need to continue the ‘Aid-for-Trade’ support measures to lower-income economies, for improving their TF scenario.

• Item Type: MPRA Paper
• Language: English
• Keywords: Trade Policy, Trade Facilitation, Exports, LPI, Empirical Estimate, Aid-for-Trade
• Subjects: F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

References

Arnold, John (2007), ‘Role of Trade Facilitation in Export Growth’, in S. Ahmed and E. Ghani (eds), South Asia: Growth and Regional Integration, pp. 191-235, New Delhi: World Bank and Macmillan.

Asian Development Bank and United Nations Economic and Social Commission for Asia and the Pacific (2013), ‘Designing and Implementing in Asia and the Pacific: 2013 Update’, Manila and Bangkok: ADB and UNESCAP.

Brulhart, Marius (2008), ‘An account of Global Intra-industry Trade, 1962−2006’, Background paper for World Development Report, Washington DC: World Bank.

Çelik, Tuncay (2011), ‘Long Run Relationship between Export and Import: Evidence from Turkey for the period of 1990-2010’, available at: http://kastoria.teikoz.gr/icoae2/wordpress/wp-content/uploads/2011/10/012.pdf (accessed August 12, 2016).

Chakraborty, Debashis and Amir Ullah Khan (2008), ‘The WTO Deadlocked: Understanding the dynamics of International trade’ New Delhi: Sage.

De, Prabir and Amrita Saha (2013), ‘Logistics, Trade and Production Networks: An Empirical Investigation’, Discussion Paper No. 181, New Delhi: RIS.

Dennis, Allen (2006), ‘The Impact of Regional Trade Agreements and Trade Facilitation in the Middle East North Africa Region’, Policy Research Working Paper No. 3837, Washington DC: World Bank.

Djankov, Simeon, Caroline Freund and Cong Pham (2010), ‘Trading on Time’, The Review of Economics and Statistics, 92(1): 166-173.

Felipe, Jesus and Utsav Kumar (2010), ‘The Role of Trade Facilitation in Central Asia: A Gravity Model’, Working Paper No. 628, New York: Levy Economics Institute.

Fontagné, Lionel, Gianluca Orefice and Roberta Piermartini (2016), ‘Making (Small) Firms Happy: The Heterogeneous Effect of Trade Facilitation Measures’, Working Paper ERSD-2016-03, Geneva: WTO.

Harding, Torfinn and Beata S. Javorcik (2012), ‘Foreign Direct Investment and Export Upgrading’, The Review of Economics and Statistics, 94(4): 964-980.

Menon, Jayant (2013), ‘Supporting the Growth and Spread of International Production Networks in Asia: How Can Trade Policy Help?’, ADB Working Paper No. 112, Manila: Asian Development Bank.

Mukherjee, Sacchidananda, Debashis Chakraborty and Julien Chaisse (2014), ‘Curtailing Subsidy Wars in World Trade: Revisiting the Economics of World Trade Organization Law on Subsidies’, Syracuse Journal of International Law and Commerce, 42(1): 1-37.

Nag, Biswajit and Jaydeep Mukherjee, ‘The Sustainability of Trade Deficits in the Presence of Endogenous Structural Breaks: Evidence from the Indian Economy’, Journal of Asian Economics, 23(5): 519-26.

Neufeld, Nora (2014), ‘Trade Facilitation Provisions in Regional Trade Agreements: Traits and Trends’, Working Paper ERSD-2014-01, Geneva: WTO.

Nordås, Hildegunn Kyvik, Enrico Pinali and Massimo Geloso Grosso (2006), ‘Logistics and Time as a Trade Barrier’, Trade Policy Working Paper No. 35, Paris: OECD.

Organisation for Economic Co-operation and Development and World Trade Organization (2015), ‘Aid for Trade at a Glance 2015: Reducing Trade Costs for Inclusive, Sustainable Growth’, Paris: OECD.

Portugal-Perez, Alberto and John S. Wilson (2010), ‘Export Performance and Trade Facilitation Reform Hard and Soft Infrastructure’, Policy Research Working Paper No. 5261, Washington DC: World Bank.

Puertas Rosa, Luisa Martí and Leandro Garcia (2014), ‘Logistics Performance and Export Competitiveness: European Experience’, Empirica, 41(3): 467-480.

Roy, Jayanta and Pritam Banerjee (2010), ‘Connecting South Asia: The Centrality of Trade Facilitation for Regional Economic Integration’, in S. Ahmed, S. Kelegama and E. Ghani (eds), Promoting Economic Cooperation in South Asia: Beyond SAFTA, pp. 110-138, New Delhi: World Bank and Sage.

Shujie, Zhang and Zhao Shilu (2009), ‘The Implication of Customs Modernization on Export Competitiveness in China’, pp. 121-132, in Impact of Trade Facilitation on Export Competitiveness: A Regional Perspective, Studies in Trade and Investment No. 66, Bangkok: UNESCAP.

United Nations Conference on Trade and Development (2011), ‘Trade Facilitation in Regional Trade Agreements’, New York and Geneva: UNCTAD.

United Nations Economic and Social Commission for Asia and the Pacific (2011), “Fighting Irrelevance: The Role of Regional Trade Agreements in International Production Networks in Asia”, Asia-Pacific Research and Training Network on Trade Study, UNESCAP, New York.

Weerahewa, Jeevika (2009), ‘Impact of Trade Facilitation Measures and Regional Trade Agreements on Food and Agricultural Trade in South Asia’, ARTNeT Working Paper No. 69, Bangkok: UNESCAP.

Wilson, John S., Catherine Mann, Yuen Pau Woo, Nizar Assanie and Inbom Choi (2002), ‘Trade Facilitation: A Development Perspective in the Asia Pacific Region’, Washington DC: World Bank.

Wilson, John S., Catherine Mann, and Tsunehiro Otsuki (2003), ‘Trade Facilitation and Economic Development: A New Approach to Measuring the Impact’, World Bank Economic Review, 17(3): 367-89.

Wilson, John S., Catherine Mann, and Tsunehiro Otsuki (2005), ‘Assessing the Benefits of Trade Facilitation: A Global Perspective’, World Economy, 28(6): 841-71.

World Bank (2016), ‘Connecting to Compete 2016: Trade Logistics in the Global Economy’, Washington DC: World Bank.

World Bank (undated a), ‘Income Level’, available at: http://wdronline.worldbank.org/worldbank/a/incomelevel (accessed August 12, 2016).

World Bank (undated b), ‘World Development Indicators’, available at:http://data.worldbank.org/data-catalog/world-development-indicators (accessed August 12, 2016).

World Bank (undated c), ‘Logistics Performance Index’, available at: http://lpi.worldbank.org/ (accessed August 12, 2016).

World Trade Organization (undated a), ‘Negotiating an agreement on trade facilitation’, available at: https://www.wto.org/english/tratop_e/tradfa_e/tradfa_negoti_e.htm (accessed August 12, 2016).

World Trade Organization (undated b), ‘Ministerial Declarations’, available at: https://www.wto.org/english/thewto_e/minist_e/min_declaration_e.htm (accessed August 12, 2016).

World Trade Organization (undated c), ‘Trade Facilitation Agreement’, available at: https://www.wto.org/english/thewto_e/20y_e/wto_tradefacilitation_e.pdf (accessed August 12, 2016).

World Trade Organization (2011), ‘Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks’, in collaboration with Institute of Developing Economies (IDE) and Japan External Trade Organization (JETRO), Geneva.