With falling tariff and non-tariff barriers, lowering other trade costs related to the logistics of moving goods through ports is key to further facilitation of world trade. Such costs are now part of the language of several GATT articles of importance to WTO negotiations. This paper estimates the effect of various port costs on re-export intensity in six major Asian ports: Dubai, Manama, Mumbai, Bandar Abbas, Damman, and Hong Kong. What we find is that the cost of transportation and logistics is the most important factor affecting re-export intensity. We also find that re-export intensity is not dissimilar between the Asian ports reviewed except Hong Kong. Hong Kong seems to outperform the rest of the ports except Dubai.
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According to Anderson and Wincoop, tariff and non-tariff barriers are less than 8% of trade costs in industrialised countries, and between 10% and 15% in developing countries.
Estimates of trade transaction costs, as a percentage of total trade, range between 2 and 15 (OECD, 2005).
The two studies are notable insofar as breadth of coverage in both geography and trade facilitation variables. Examples of other studies that have estimated the effect of behind-the-border costs on trade performance include Clarke's (2005) study on the effect of communication facilities, Nordas and Piemartini's (2004) on the effect of domestic infrastructure, and Djankov et al's (2006) and Nordas et al's (2006) on the effect of time delays.
Unlike conventional firms in trade models, where domestic firms actually produce the goods and sell them directly to foreign consumers, re-exporters (also known as entre-pot traders) are intermediaries between foreign sellers and foreign (or domestic) buyers (Feenstra and Hanson, 2004).
From here on, subscripts refer to derivatives.
The test is based on comparing the residual sums of squares of equation 16 with the residual sum of squares of the restricted model
The export/domestic sales ratios and average size in terms employment for the rest of the ports are Bahrain (0.49, 43), Saudi Arabia (0.41, 158), Iran (0.44, 191), Hong Kong (0.55, 39), and India (0.48, 270).
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