Trade Policy, Trade Costs, and Developing Country Trade

This paper briefly reviews new indices of trade restrictiveness and trade facilitation that have been developed at the World Bank. The paper also compares the trade impact of different types of trade restrictions applied at the border with the effects of domestic policies that affect trade costs. Based on a gravity regression framework, the analysis suggests that tariffs and non-tariff measures continue to be a significant source of trade restrictiveness for low-income countries despite preferential access programs. This is because the value of trade preferences is quite limited: a new measure of the relative preference margin developed in the paper reveals that this is very low for most country-pairs. Most countries with very good (duty-free) access to a market generally have competitors that have the same degree of access. The empirical analysis suggests that measures to improve logistics performance and facilitate trade are likely to have the greatest positive effects in expanding developing country trade, increasing the trade impacts of lowering remaining border barriers by a factor of two or more.

Bibliographic Details

Main Authors:	Nicita, Alessandro, Hoekman, Bernard
Language:	English
Published:	Washington, DC: World Bank 2008-12
Subjects:	TARIFFS, NONTARIFF MEASURES, TRADE FACILITATION, LOGISTICS, ECONOMIC DEVELOPMENT, DOHA ROUND, AD VALOREM, AGRICULTURAL PRODUCTS, AGRICULTURAL TRADE, AGRICULTURE, APPAREL, AVERAGE TARIFF, AVERAGE TARIFFS, BARRIERS TO TRADE, BASKET OF GOODS, BEST MARKET, BILATERAL IMPORTS, BILATERAL TRADE, BORDER PROTECTION, BORDER TRADE, BUDGET DEFICITS, BUSINESS ENVIRONMENT, CARRIERS, COMPARATIVE ADVANTAGE, COMPETITIVENESS INDEX, CONTRACT ENFORCEMENT, COUNTERVAILING MEASURES, COUNTRY FIXED EFFECTS, CUSTOMS, CUSTOMS BROKERS, CUSTOMS CLEARANCE, CUSTOMS CLEARANCE PROCEDURES, DEMAND ELASTICITIES, DEMAND ELASTICITY, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DOMESTIC INDUSTRIES, DOMESTIC TRADE, DUMPING, E-BUSINESS, ECONOMIC POLICY, EUROPEAN UNION, EXPORT COSTS, EXPORT MARKETS, EXPORTERS, EXPORTING COUNTRIES, EXPORTS, FACTORY GATE, FREE TRADE, FREE TRADE AGREEMENTS, FREIGHT FORWARDERS, GDP, GDP PER CAPITA, GLOBAL COMPETITIVENESS, GLOBAL MARKETS, GLOBAL TRADE, GRAVITY EQUATION, GRAVITY MODEL, GRAVITY MODELS, IMPORT COSTS, IMPORT VALUES, IMPORTING COUNTRIES, IMPORTING COUNTRY, INCOME, INTERNAL TRADE, INTERNATIONAL BANK, INTERNATIONAL COOPERATION, INTERNATIONAL ECONOMICS, INTERNATIONAL TRADE, INVESTMENT CLIMATE, LOW-INCOME COUNTRIES, MARKET ACCESS, MARKET REGULATION, MERCHANDISE TRADE FLOWS, MIDDLE INCOME COUNTRIES, MIDDLE-INCOME COUNTRIES, MIDDLE-INCOME ECONOMIES, PARTICULAR COUNTRY, PATTERN OF TRADE, POLICY RESEARCH, POSITIVE EFFECTS, PREFERENTIAL ACCESS, PREFERENTIAL AGREEMENTS, PREFERENTIAL MARGIN, PREFERENTIAL MARGINS, PREFERENTIAL RATES, PREFERENTIAL TARIFF, PREFERENTIAL TRADE, PREFERENTIAL TRADE AGREEMENTS, PREFERENTIAL TRADE ARRANGEMENTS, PROTECTIONIST, QUANTITATIVE RESTRICTIONS, RED TAPE, REGIONAL AGREEMENTS, REGIONAL TRADE, REGIONAL TRADE AGREEMENTS, REGULATORY ENVIRONMENT, REGULATORY FRAMEWORK, REGULATORY POLICIES, REGULATORY REGIMES, RULES OF ORIGIN, TARIFF BARRIERS, TARIFF EQUIVALENT, TARIFF EQUIVALENTS, TARIFF LINE, TARIFF LINES, TARIFF PREFERENCES, TARIFF PROTECTION, TARIFF REDUCTION, TARIFF STRUCTURE, TRADE COSTS, TRADE DATA, TRADE DISTORTIONS, TRADE EFFECTS, TRADE FLOWS, TRADE IMPEDIMENTS, TRADE LIBERALIZATION, TRADE LOGISTICS, TRADE MORE, TRADE PERFORMANCE, TRADE POLICIES, TRADE POLICY, TRADE POLICY ANALYSIS, TRADE POLICY REFORM, TRADE PREFERENCE, TRADE PREFERENCES, TRADE RESTRICTIONS, TRADE TAXES, TRADE VOLUMES, TRANSACTIONS COSTS, TRANSPARENCY, TRANSPORT COSTS, UNILATERAL ACTIONS, UNILATERAL REFORMS, VALUE OF IMPORTS, VALUE OF TRADE, VOLUME OF TRADE, WORLD DEVELOPMENT INDICATORS, WTO, ZERO TARIFFS,
Online Access:	http://documents.worldbank.org/curated/en/2008/12/10115805/trade-policy-trade-costs-developing-country-trade https://hdl.handle.net/10986/6341
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