The Impact of Logistics Performance on Argentina, Brazil, and the US Soybean Exports from 2012 to 2018: A Gravity Model Approach

João Gilberto Mendes Dos Reis,José António Sarsfield Pereira Cabral,Pedro Sanches Amorim,Rodrigo Carlo Toloi

doi:10.3390/agriculture10080338

Abstract

Soybean is one of the main sources of protein directly and indirectly in human nutrition, and it is highly dependent on logistics to connect country growers and international markets. Although recent studies deal with the impact of logistics on international trade, this impact in agricultural commodities is still an open research question. Moreover, these studies usually do not consider the influence of all components of the logistics on trade. This paper, therefore, aims at identifying the role of logistics performance in soybean exports among Argentina, Brazil, the US and their trading partners from 2012 to 2018. Using an extended gravity model, we examine whether the indicators of the World Bank Logistics Performance Index (LPI), adopted as a proxy of logistics efficiency, are an important determinant of bilateral soybean trade facilitation. The results lead to the conclusion that it is necessary to analyze the LPI throughout its indicators because they may affect trade differently. The novelty of this article is to provide an analysis of the impact of different logistics aspects on commodity trade, more specifically in the soybean case. Finally, regarding the model results, logistics infrastructure has a positive and significant correlation with soybean trade as supposed in most of the literature.

Highlights

In today’s global economy, logistics has been considered one of the key elements of international trade [1]
We argue that logistics cannot be addressed in an augmented gravity model as a unique indicator using the main Logistics Performance Index (LPI) index and—this is the way that it has usually been conducted in the literature
The indicators of the LPI were incorporated to the augmented gravity model as a proxy of logistics efficiency

Summary

Introduction

In today’s global economy, logistics has been considered one of the key elements of international trade [1]. Logistics allows countries to trade industrial and agriculture products all over the world. Which aspects of logistics performance are more relevant when countries decide to negotiate is still an open research question. Several studies have been addressing the logistics performance on international trade [1,3,4,5,6,7,8,9,10]. Using the Logistics Performance Index (LPI) of the World Bank [11] and connecting with basic elements of gravity models on trade [12,13,14,15,16]. Bensassi et al [6] established an augmented gravity model using the LPI and some local indicators to verify how geographical factors and transport

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