Trade Policy, Trade Costs, and Developing Country Trade

By Bernard M. Hoekman, Alessandro Nicita. 2008

514 citations recorded by the source corpus.

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.

Subfields: Development, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/1568bef1f8ed691de6748bca5cdaa8c17a93a976

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Citations in the corpus

Export Performance and Trade Facilitation Reform: Hard and Soft Infrastructure (2010, methodology): “…restrictiveness and trade facilitation developed at the World Bank, such as the Logistic Performance Index and Doing Business in a gravity model, Hoekman and Nicita (2008) suggest that tariffs and non-tariff measures continue to be a significant source of trade restrictiveness for low-income…”
The Impact of Infrastructure on Trade and Economic Growth in Selected Economies in Asia (2015, background): “Hoekman and Nicita (2008) found that poor roads and ports, poorly performing customs agencies and procedures, weakness in regulatory capacity, and limited access to finance and business services affected trade.”
Measuring the relative importance of the logistics performance index indicators using Best Worst Method (2018, background): “Hoekman and Nicita (2011) review di ﬀ erent indices of the World Bank regarding trade restrictions and facilitation, and apply them to developing countries.”
Services Trade and Policy (2010, background): “Estimates of trade costs, including the effects of margins, suggest that they are far more important for developing country market access to foreign markets than the tariffs they face – e.g., Djankov, Freund and Pham, 2006; Hoekman and Nicita, 2008).”
Does aid for trade enhance export performance? Investigating on the infrastructure channel (2012, unknown): “These evidences suggest that barriers to trade need to be addressed by a concerted policy action and that technical assistance to upgrade logistics and fight corruption can play a substantial role in it (Hoekman and Nicita, 2008; Portugal-Perez and Wilson, 2008; Anderson and Marcouiller, 2002).”
Non-Tariff Measures and Standards in Trade and Global Value Chains (2015, background): “…authors find that standards are a significant source of trade restrictiveness for middle- and low-income countries (e.g., Anders and Caswell, 2009; Hoekman and Nicita, 2011; Tran et al., 2012; Wilson et al., 2003b), while others indicate that standards or their harmonization have no impact at all…”
The importance of the Logistics Performance Index in international trade (2014, unknown): “In this sense, Hoekman and Nicita (2008) and Hoekman and Nicita (2010), using the LPI and Doing Business, suggest that tariff and nontariff barriers are still a significant obstacle to international trade and commerce in countries with lower income levels.”