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Estimating the effects of logistics performance on trade: Evidence from different gravity model approaches

Author

Listed:
  • Filip Bugarcic

    (University of Kragujevac, Serbia)

  • Joern Kleinert

    (University of Graz, Austria)

Abstract

This paper examines logistics performance's effects on international trade. A country's logistics' capacity is measured by the Logistics Performance Index (LPI), compiled by the World Bank, which gives comparable country-level data for 166 countries in six waves. We use the LPI in different gravity model approaches comparing the results from relative gravity, fixed effects models as OLS and Poisson regressions, and the HMR two-stage procedure which specifies a probit estimation in the first stage and non-linear augmented gravity in the second. We construct a bilateral trade dataset with 28,020 bilateral trade relationships from CEPIIs trade database. In addition, we show and compare the effects for different country groups. The results of all used approaches indicate sizable and significant positive effects of logistics performance on international trade and in particular export activities. The findings give relevant policy implications and stress the need to improve the logistics system and associated performance to encourage exports.

Suggested Citation

  • Filip Bugarcic & Joern Kleinert, 2024. "Estimating the effects of logistics performance on trade: Evidence from different gravity model approaches," Graz Economics Papers 2024-13, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2024-13
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Trade logistics; Export; Gravity modeling; Relative gravity.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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