THE EFFECT OF TRANSPORT AND LOGISTICS ON TRADE FACILITATION AND TRADE: A PLS-SEM APPROACH

Abstract

Trade facilitation promotes increased opportunities to participate in
international trade. Current research has mainly analyzed the impacts of
tariff-related and trade barriers. Nevertheless, as trade policies shift toward
removing non-tariff barriers, studies addressing core elements become relevant,
requiring a more systemic view at a simultaneous level. The study proposes that
transportation infrastructure (i.e., roads, seaports, railroads, and airports) and
logistics are core elements supporting trade facilitation efforts at the local level.
The study provides empirical evidence on the direct and indirect effects among
transportation infrastructure, logistics, trade facilitation, and trade. Partial least
squares–structural equation modeling is the main empirical method employed
to examine the interrelationship of the quality of transportation infrastructure,
logistics, trade facilitation, and trade using a sample of 80 countries for the
years 2012, 2014, and 2016. There is a large direct effect of transportation
infrastructure on trade facilitation and a vast direct effect on logistics. Logistics
has a small direct effect on trade facilitation. I also conduct mediation analyses,
which show that logistics has a larger effect on trade via trade facilitation than
transportation infrastructure quality has. These findings suggest that trade
facilitation implementation might not be enough to tackle current challenges and
ongoing economic development. Governments should prioritize the integration
of logistics stakeholders in the public sector to optimize the benefits of global
networks. Thus, the significance of transportation infrastructure and logistics in
trade should not be neglected, as the private sector (i.e., logistics providers) play
a large and relevant role in practice.