Export Diversification Effects of the WTO Trade Facilitation Agreement

Abstract

Summary We estimate the effects of trade facilitation on export diversification, as measured by two extensive margins: the number of products exported by destination and the number of export destinations served by product. To address causality we use only exports of new products, or exports to new destinations. We find a positive impact of trade facilitation on the extensive margins of trade. The results are robust to alternative definitions of extensive margins, different sets of controls, and various estimation methods. Simulation results suggest substantial extensive margin gains from trade facilitation reform in Sub-Saharan Africa and in Latin America and the Caribbean.