Exports and logistics

Working paper

Do better trade logistics reduce trade costs, raising a country's exports? Yes, but the magnitude of the effect depends on country size. Applying a new gravity model to a comprehensive logistics index, we find that an average-sized country would raise exports by about 46% after a one-standard deviation improvement in logistics. Most countries are much smaller than average however, so the typical effect is only 6%. This difference is chiefly due to multilateral resistance, which stresses that bilateral trade costs relative to multilateral trade costs matter for bilateral exports. Our method also distinguishes between the effects of logistics on the intensive margin (exports per firm) and the extensive margin (the number of exporting firms) of trade.

Authors: Behar, A; Nelson, B; Manners, P

• Publication status: Published
• Publisher: University of Oxford
• Series: Department of Economics Discussion Paper Series
• Publication date: 2009-07-01
• Paper number: 439
• Keywords: trade facilitation; logistics; multilateral resistance; gravity; firm heterogeneity