Trading on Time

Simeon Djankov, Caroline Freund, Cong S Pham
2010 Review of Economics and Statistics  
We determine how time delays affect international trade, using newlycollected World Bank data on the days it takes to move standard cargo from the factory gate to the ship in 126 countries. We estimate a modified gravity equation, controlling for endogeneity and remoteness. On average, each additional day that a product is delayed prior to being shipped reduces trade by at least 1 percent. Put differently, each day is equivalent to a country distancing itself from its trade partners by 70 km on
more » ... average. Delays have an even greater impact on developing country exports and exports of timesensitive goods, such as perishable agricultural products. In particular, a day's delay reduces a country's relative exports of time-sensitive to time-insensitive agricultural goods by 6 percent. JEL codes: F13, F14 and F15
doi:10.1162/rest.2009.11498 fatcat:uogfjhx4bzai7lird6stqjr53u