The Time Cost of Documents to Trade

Abstract

The article shows that the number of documents required to export and import tend to increase the time cost of shipments. However, the increase in the time cost of increased documentation is much larger for countries that are relatively poor and large in size. One interpretation here is that the relatively rich countries that have more resources and the relatively small countries that rely more on trade invest more in building efficient documentation systems. Our findings suggest caution in interpreting how input-based measures, such as the number of required documents to trade, affect outcome measures.

KEYWORDS:

• country size
• openness
• trade facilitation

Notes

¹ For example, Rose (2006) shows that small countries are more open to trade than large countries, but country size does not matter for a number of other economic and social phenomena, including inflation, health, quality of institutions, and income levels.

² That is, we use the Ordinary Least Squares estimation method with country and year fixed effects included in the specification.

³ We do find that Afghanistan, China, and Tanzania have unduly large effects on our results. Including China in the sample makes our results weaker, while the opposite holds for Afghanistan. For Tanzania, the results vary depending on the specification. To ensure that our results are not unduly affected by individual countries, we exclude Afghanistan, China, and Tanzania from our sample.

⁴ Tariff rate is the weighted tariff rate as reported in World Development Indicators, World Bank.

⁵ The changes in the value of Time discussed here for rich vs. poor countries are calculated fixing the value of Large country dummy at its sample mean.

⁶ The changes in the value of Time discussed here for small vs. large countries are calculated fixing the value of Rich country dummy at its sample mean.