Estimating the effects of logistics performance on trade: Evidence from different gravity model approaches

Filip Bugarcic () and Joern Kleinert ()
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Filip Bugarcic: University of Kragujevac, Serbia
Joern Kleinert: University of Graz, Austria

No 2024-13, Graz Economics Papers from University of Graz, Department of Economics

Abstract: This paper examines logistics performance's effects on international trade. A country's logistics' capacity is measured by the Logistics Performance Index (LPI), compiled by the World Bank, which gives comparable country-level data for 166 countries in six waves. We use the LPI in different gravity model approaches comparing the results from relative gravity, fixed effects models as OLS and Poisson regressions, and the HMR two-stage procedure which specifies a probit estimation in the first stage and non-linear augmented gravity in the second. We construct a bilateral trade dataset with 28,020 bilateral trade relationships from CEPIIs trade database. In addition, we show and compare the effects for different country groups. The results of all used approaches indicate sizable and significant positive effects of logistics performance on international trade and in particular export activities. The findings give relevant policy implications and stress the need to improve the logistics system and associated performance to encourage exports.

Keywords: Trade logistics; Export; Gravity modeling; Relative gravity. (search for similar items in EconPapers)
JEL-codes: F12 F13 F14 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-int
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