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Overcoming Border Bottlenecks

The Costs and Benefits of Trade Facilitation

image of Overcoming Border Bottlenecks

International trade has grown rapidly in recent years, thanks in part to the progressive reduction of tariffs and quotas through successive rounds of multilateral trade liberalisation. However, this progress brings to light one of the remaining weak links of international trade, which prevents countries from drawing full benefits from the advantages of open global markets: border bottlenecks generated by inefficient, outdated and complex trade procedures and formalities. This book brings together six studies that examine to what extent and in which ways the costs of inefficient border processes influence trade and investment flows, how institutional and political factors affect the design and implementation of efficiency-enhancing measures, whether the expected benefits of these measures enough to justify the expenses of putting them in place, and whether the expenses involved are within the reach of developing and least developed countries, especially in light of other development priorities.

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Quantitative Assessment of the Benefits of Trade Facilitation

This chapter analyses the economic impact of trade facilitation and discusses the distribution of potential benefits across countries. Unlike earlier research, the analysis highlights differences in trade transaction costs due to the efficiency and integrity of interacting businesses and administration, the characteristics or kind of traded goods and the size and type of trading businesses. Assuming trade facilitation to lead to a reduction in trade transaction costs of 1% of the value of world trade, aggregate welfare gains are estimated to amount to about USD 40 billion worldwide, with all countries benefiting and non-OECD countries experiencing the biggest gains in relative terms.

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