How much of international trade costs can be mitigated through implementation of trade facilitation measures and policies? What measures and policies affect trade costs the most? This paper updates findings from Duval and Utoktham (2011), based on ESCAP-World Bank Trade Costs Database. Among the top trade facilitating regions are East and North-East Asia, followed by South-East Asia. The dominance of those regions are fully consistent with the trade-led growth strategies of these economies and their emphasis on reducing international trade costs.
Results of the trade costs modeling exercise based on updated data continue to suggest that improving port efficiency (liner shipping connectivity) and access to information and communication technology facilities are essential to reducing trade costs. Policies aimed at liberalizing logistics and information technology services and increasing competition among service providers should therefore be readily considered, with a view to maximizing efficiency at any given level of hard infrastructure development. Establishment of public-private partnerships to accelerate the development of the national IT and transport and logistics infrastructure may also be actively pursued.
The econometric results also supports the view that, given limited resources available, focusing on improving the overall business environment may be often more effective in facilitating trade than implementing soft measures solely targeted at speeding up movement of goods between factory and the port (or vice-versa).