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Improving Export Performance through Logistics Cost: Evidence from APEC Economies Maddaremmeng A. Panennungi. Background. It is probably that “the exploration and exploitation of the reduction of tariff barrier” in enhancing trade performance has reached its limit:

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Improving Export Performance through Logistics Cost: Evidence from APEC EconomiesMaddaremmeng A. Panennungi

background
Background

It is probably that “the exploration and exploitation of the reduction of tariff barrier” in enhancing trade performance has reached its limit:

  • Doha Development Agenda (DDA) has shown no significant progress until now (APEC since the beginning support the multilateral system and each year this support included into the AELM statement)
  • It is followed by the aggressive regional and bilateral free trade area which could increase world inefficiency
background1
Background

Political economy could be one of the important explanation of “reaching the limit”:

If the political economy were the main reasons of the protectionism, there will be a positive relation between the higher the size of the economy (GDP) or the population with the level of the protection

background2
Background

Size (GDP,Population) vs. Simple Average Tariff in APEC Economies

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Background
  • Another important source in improving trade performance is improving logistics performance
  • It is now the time to focus on increasing trade performance (flow of goods and services) through logistics performance. In addition, the increasing logistics performance could also increase the flow of capital, labor and people
  • One of the model that usually use to understand the flow of goods and services is the gravity model
  • As the example we could show the movement of goods&services from economy i to economy j
problem statement
Problem Statement
  • There is no logistics performance indicator that fit this model
  • The World Bank has developed a single LPI (Logistics Performance Indicator) based on the global provider interview worldwide; however, this LPI does not distinguish between the domestic logistics and international logistics
objectives
Objectives
  • To construct logistics performance index based on the composite of the available indicators for DLI and ILI
  • To show the relation between export performance and new logistics performance index (DLI and ILI) in APEC economies
results
Results
  • Based the available indicators in WDI, even though with several adjustments, only 60 economies data that could be used to construct the DLI and ILI in 2010
  • Among 60 economies, only 17 from APEC economies
  • Several results related to APEC economies as followings
conclusion and policy recommendation
Conclusion and Policy Recommendation

Conclusions:

  • It is shown that the logistic index (domestic logistics and international logistics of origin and destination economies) have a positive relation with the trade performance of the origin and destination economies.
  • The development of logistics one economy in APEC will increase the trade performance of both the improved logistics economy and all APEC economies. Because the increasing DLI or ILI will increase both export and import.

Policy recommendation:

APEC economies should develop domestic and international logistic index to be evaluated yearly which is based on the both objective and subjective data that available for all APEC economies.

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