Publication: Trade Policies, Investment Climate and Exports
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2011-02
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2017-06-28
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There is a large body of research that explores international trade as a source of the dispersion in income levels and growth performances across countries. The trade liberalization policies undertaken between 1950 and 2006 led to an almost 30 fold growth in the volume of international trade. However this increase has not been homogeneous across countries. This study investigates a possible reason that prevents convergence of countries in export performance. It shows that regulatory quality, customs efficiency, quality of infrastructure, and access to finance among other factors increase export performance. Furthermore, it shows that countries that are relatively more constrained in accessing to foreign markets benefit more from improvements in investment climate than the countries with easier foreign market access. Hence attaining a favorable investment climate for private sector development should be an important policy objective for relatively closed economies to achieve convergence in export volumes with countries that have more liberal trade policies.
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“Seker, Murat. 2011. Trade Policies, Investment Climate and Exports. © World Bank. http://hdl.handle.net/10986/27456 License: CC BY 3.0 IGO.”
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Publication Trade Policies, Investment Climate, and Exports across Countries(2011-05-01)There is a large body of research that explores international trade as a source of the dispersion in income levels and growth performances across countries. The trade liberalization policies undertaken between 1950 and 2006 led to an almost 30 fold growth in the volume of international trade. However this increase has not been homogeneous across countries. This study investigates a possible reason that prevents convergence of countries in export performance. It shows that regulatory quality, customs efficiency, quality of infrastructure, and access to finance among other factors increase export performance. Furthermore, it shows that countries that are relatively more constrained in accessing to foreign markets benefit more from improvements in investment climate than the countries with easier foreign market access. 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The empirical analysis in this paper demonstrates gains to trade in the region from reform and capacity building in trade facilitation at the regional level. When considering intraregional trade, if countries in South Asia raise capacity halfway to East Asia's average, trade is estimated to rise by USD 2.6 billion. This is approximately 60 percent of the total intraregional trade in South Asia. Countries in the region also have a stake in the success of efforts to promote capacity building outside its borders. If South Asia and the rest of the world were to raise their levels of trade facilitation halfway to the East Asian average, the gains to the region would be estimated at USD 36 billion. Out of those gains, about 87 percent of the total would be generated from South Asia's own efforts (leaving the rest of the world unchanged). 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