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The Impact of Trade Facilitation on Cross-Border E-Commerce Exports of China Based on the Gravity Model

Yuan Liang
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Yuan Liang: Faculty of Economics, Thammasat University,Bangkok, Thailand

International Journal of Business and Economic Affairs (IJBEA), 2020, vol. 5, issue 4, 138-155

Abstract: Trade facilitation has become an important issue faced by all countries to ease bureaucratic delays and red tape of cross-border transport. This paper first analyses the development of trade facilitation and the existing problems in Chin’s cross-border e-commerce. Then, it analyses the influence mechanism of trade facilitation on cross-border e-commerce from the theoretical basis and evaluation system. Second, it establishes the trade facilitation system, including five primary indicators and thirty-one secondary indicators from the Global Competitiveness Report. The five primary indicators are policy environment, legal environment, infrastructure, custom environment, and technology readiness. According to Trade Facilitation Indicators (TFI), it quantifies trade facilitation in China and its trading partners from 2007 to 2017. Third, this paper refers to Anderson & Van Wincoop’s gravity model, which considers the multilateral resistance terms ignored by the traditional gravity model. It establishes the gravity model to analyse the impact of TFI on China’s cross-border e-commerce exports. China’s cross-border e-commerce export is taken as the explained variable. The GDP, population, exchange rate, distance between the two countries, and whether there is a free trade agreement with China, etc. as the explanatory variable. Moreover, according to the World Bank standard, trading partners divided into high-income, upper-middle-income, and lower-middle-income economies. It analyses the impact of their TFI’s five primary indicators on China’s cross-border exports. Besides, the paper uses OLS and Poisson Pseudo-Maximum Likelihood estimation for regression, which can directly estimate the gravity model in nonlinear form and eliminate the heterogeneity. The empirical result shows that trade facilitation has a significant positive impact on China’s cross-border e-commerce exports. The customs environment of high-income and lower-middle-income countries have the most obvious impact on cross-border e-commerce exports. The infrastructure of upper-middle-income countries has the most significant impact on cross-border e-commerce exports. Finally, it makes policy recommendations on the aspects of TFI that should be prioritised to countries.

Keywords: Trade facilitation; Cross-border e-commerce; International trade; Gravity model; TFIs (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:aya:ijbeaa:2020:p:138-155

DOI: 10.24088/IJBEA-2020-54001

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