Global economic crisis and trade: the role of trade facilitation

Abstract

The onset of the global economic crisis has led to a slump in global demand. However, the extent to which major trading powers have reduced their imports has differed by trading partner. Like financial contagion, could it be the case that countries that are better integrated in the global trading system via efficient trade facilitation environment suffered the most because of their interconnectedness? Using recent data from the US census bureau, this study finds that the efficiency of the trade facilitation environment actually helped to mitigate the effects of the global slump in demand. Other countries with a better trade facilitation environment suffered less of a drop in their exports to the United States compared to those with a weaker trade facilitation environment. Specifically, an extra day's delay in the exporting country accounted for about a 0.5% more fall in import demand from the United States.

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