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Exports and International Logistics

Authors


  • Part of this work was conducted when the authors were at the Department of Economics, University of Oxford, and while Behar was at the Development Economics Research Group at the World Bank. The authors thank Peter Neary, Caroline Freund, Tony Venables, Alberto Portugal-Perez, Luis Serven and Adrian Wood. Please note: the views expressed in this paper are those of the authors and not necessarily those of the Bank of England, the Monetary Policy Committee, or the Financial Policy Committee, and should not be attributed to the IMF, its Executive Board, or its management.

Abstract

Better international logistics raise a developing country's exports, but the magnitude of the effect depends on the country's size. We apply a gravity model that accounts for firm heterogeneity and multilateral resistance to an international logistics index. A one standard deviation improvement in logistics is equivalent to a 14% reduction in distance. An average-sized developing country would raise exports by approximately 36%. Most of the countries are much smaller than average, so the typical effect is 8%. This difference is chiefly due to the dampening effect of multilateral resistance, which is more important for small countries.

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