Trade Impact of Reducing Time and Costs at Borders in the Central Asia Regional Economic Cooperation Region

Abstract

ABSTRACT Trade facilitation, by reducing trade costs and raising the efficiency of moving goods across borders, is integral to international trade. Using novel data on bilateral time and cost measures for trade facilitation in the Central Asia Regional Economic Cooperation (CAREC) Program, this study estimates the trade impact of reducing time and costs at border crossing points within CAREC. The gravity model estimations show that reducing time by 10% at the inbound border increases trade among CAREC countries by 1 − 2%. Trade impact of reduction in time and costs at the inbound border is estimated to be higher than that at the outbound border. We also find that the trade impact of reducing time at the inbound border increases with the severity of time bottleneck and the trade impact is more effective in recent year since 2013.