engleski

The Impact of Trade Facilitation on International Trade

Trade facilitation plays a crucial role in country’s engagement in the international trade. As tariffs come down, estimating how other factors affect trade has increasing policy importance. A country’s trade can enhance not only through its own trade facilitation reforms, but also the reforms of its trading partners. The aim of this research is to empirically investigate the impact of trade facilitation on international trade distinguishing between developed and developing countries. We employ augmented gravity model in order to estimate this relationship across 150 countries. The World Bank Logistic Performance Index (LPI) is used as a proxy variable of trade facilitation. The results suggest that trade will increase with improvements in trade facilitation. The results also lead us to the conclusion that developing countries must take steps forward in trade facilitation in order to increase its engagement in international trade. If policies are properly implemented, trade facilitation may increase country’s trade involvement.

Trade facilitation, logistics performance index, LPI, international trade, gravity model

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