Inmaculada Martinez-Zarzoso, PhD, Depatrtment of Economics, Universitat Jaume I and Instituto de Economía Internacional, Castellón (Spain), Georg-August Universitaet Goettingen, Platz der Goettinger Sieben 3, Goettingen, 37073, Germany and Laura MÁrquez-Ramos, PhD, Economics, University of Economics, Varna (Bulgaria) and Depatrtment of Economics, Universitat Jaume I and Instituto de Economía Internacio, Georg-August Universitaet Goettingen, Platz der Goettinger Sieben 3, Goettingen, 37073, Germany.
This paper aims to analyse the effect of trade facilitation on sectoral trade flows. We use data from the World Bank’s Doing Business Database on the fees associated with completing the procedures to export or import the goods in a country, on the number of documents needed and on the required time to complete all the administrative procedures to import and to export. An augmented gravity equation is estimated for 13 exporters and 167 importers using a number of estimation techniques, namely OLS, PPML and Harvey. PPML results are less stable across specifications and show a worse performance in terms of forecasting accuracy. Nonetheless, a common result is obtained, transport costs, the number of days and the number of documents required to trade, diminish trade flows. Therefore, results obtained in this paper support those multilateral initiatives as the one in the WTO of encouraging to its members to assess their trade facilitation needs and priorities, since they are supposed to have positive effects not only on the country that improves trade facilitation, but also on his trading partners.