Trade Impact of Reducing Time and Costs at Borders in the CAREC Region

Using novel data on bilateral time and cost measures for trade facilitation in the CAREC Program, we estimate the trade impact of reducing time and cost at border crossing points within CAREC. We find that (i) time taken at an importer border is more influential in promoting trade than at the exporter border, and (ii) at an importer’s border, time is a more objective measure than cost in determining trade flow changes.

Gravity model estimations show that reducing time at the importer border by 10% increases intra-regional trade among CAREC countries by 1.41%. However, simulation results show that trade facilitation only at borders may not be sufficiently effective to lead to broader economic impacts in the CAREC region; rather, holistic approaches at and behind borders are needed.