Export Performance and Trade Facilitation Reform: Hard and Soft Infrastructure

• Published in: World development Vol. 40; no. 7; pp. 1295 - 1307
• Main Authors: Portugal-Perez, Alberto, Wilson, John S.
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01-07-2012; Pergamon Press Inc
• Subjects: Business; Developing countries; Economic models; Estimation; Export performance; Exports; gravity model; Income; Infrastructure; LDCs; Reform; Regulatory reform; soft and hard infrastructure; Studies; Sub-Saharan Africa; Trade; trade facilitation; export performance; trade facilitation; developing countries; soft and hard infrastructure; Sub-Saharan Africa; gravity model
• ISSN: 0305-750X; 1873-5991
• DOI: 10.1016/j.worlddev.2011.12.002

We estimate the impact of aggregate indicators of “soft” and “hard” infrastructure on the export performance of developing countries. We derive four new indicators for more than 100 countries over the period 2004–07. Estimates show that trade facilitation reforms do improve the export performance of developing countries. This is particularly true with investment in physical infrastructure and regulatory reform to improve the business environment. The findings provide evidence that the marginal effect of the transport efficiency and business environment improvement on exports appears to be decreasing in per capita income. In contrast, the impact of physical infrastructure and information and communications technology on exports appears increasingly important the richer a country becomes. We also find statistical evidence on the complementarity between hard infrastructure and soft infrastructure, as captured by our indicators. Finally, drawing on estimates, we compute illustrative ad-valorem equivalents of improving each indicator halfway to the level of the top performer in the region.