Trade Costs, Barriers to Entry, and Export Diversification in Developing Countries
This paper finds that a 1 percent reduction in the cost of exporting or the cost of international transport is associated with an export diversification gain of 0.3 percent or 0.4 percent respectively. Lower domestic market entry costs can also...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/09/8367098/trade-costs-barriers-entry-export-diversification-developing-countries http://hdl.handle.net/10986/7385 |
| Summary: | This paper finds that a 1 percent
reduction in the cost of exporting or the cost of
international transport is associated with an export
diversification gain of 0.3 percent or 0.4 percent
respectively. Lower domestic market entry costs can also
promote diversification, but the elasticity is weaker
(-0.1). To obtain these results, the authors construct new
measures of export diversification for 118 developing
countries using highly detailed 8-digit mirror data from the
European Union. The analysis also incorporates new export
cost data from the World Bank's Doing Business
database, covering document preparation, inland transport,
administrative fees, and port/customs charges. Findings are
highly robust, including to the use of geography and
colonial history as instruments for trade and entry costs.
Both the signs and relative magnitudes of these effects are
consistent with predictions from a heterogeneous firms model
of trade with asymmetric costs. |
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