Trade Policy, Trade Costs, and Developing Country Trade

This paper reviews some indices of trade restrictiveness and trade facilitation and 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. The results also suggest that behind-the-border measures to improve logistics performance and facilitate trade are likely to have a comparable, if not larger, effect in expanding developing country trade, especially exports.