LOGISTICS PERFORMANCE INDEX IN INTERNATIONAL TRADE: CASE OF CENTRAL AND EASTERN EUROPEAN AND WESTERN BALKANS COUNTRIES

Filip Ž Bugarčić,Viktorija Skvarciany,Nenad Stanišić

doi:10.3846/btp.2020.12802

Abstract

The volume of international trade heavily depends on factors facilitating trade and contributing to reducing its costs. The importance of international logistics as trade facilitator is increasingly emphasised in the literature. The aim of the paper is to assess the level of the impact of logistics performance on trade volume in the Central and Eastern European countries (CEECs) and Western Balkans. In order to achieve the aim, the impact of Logistic Performance Index (LPI) on international trade in 2007 and 2018 is investigated. This relationship is examined using the gravity model approach with a focus on overall LPI and its components. The research results show that there is a positive statistical significance and impact of logistics on bilateral trade between CEECs, and logistics justifies the role of a trade facilitator. Besides, the importance of LPI components in intensifying international trade was emphasised. Research implications indicate that improving logistics performance and logistics services lead to a positive impact on the volume of international trade. Better logistics performance in trading countries will lead to increased bilateral trade and reduced trade costs. The limitation of the research is that only two years have been taken into account. This is done in order to highlight the differences between the year the LPI was introduced, and the last year the LPI was calculated.

Highlights

The logistics sector has a significant role in facilitating trade, reducing transport costs and stimulating economic growth
Considering that so far the examinations of the effects of logistics performance have been mainly related to the global level, the contribution of this paper is to examine these effects using the gravity model approach on the specific example of Central and Eastern European countries (CEECs) and Western Balkans countries, in order to present the particular results in 2007 and 2018
The paper examined the effects of logistics performance in international trade using a gravity model approach for 16 CEECs

Summary

Introduction

The logistics sector has a significant role in facilitating trade, reducing transport costs and stimulating economic growth. High-quality trade logistics, combined with the liberalisation of the economic environment, contributes to an increase in trade volume (Hausman, Lee, & Subramanian, 2013). It could have a positive impact on economies of scale, as well as on the amount of distribution, production activities and influence on economic growth (D’Aleo & Sergi, 2017). An efficient transport and logistics sector contribute to the facilitation of international trade and enables economic operators to efficiently carry out the import and export business of goods and services. The steady increase in international trade, as well as the desire of many countries to accelerate the process of integration into the global trading system, depends on maintaining the openness of the global trading system and on improving the quantity and efficiency of support structures such as logistics services (Gani, 2017)

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