Value-Added Gains from Trade Facilitation: Evidence from Developing Countries in Africa and Asia

This paper evaluates the effects of foreign trade facilitation on gross exports and value added. Based on a gravity model of trade, we firstly estimate sectoral gross-trade elasticities to the time it takes to import and export. We secondly translate those elasticities into sectoral value-added gains using an input-output framework, accounting for the global fragmentation of production. We distinguish between sectoral value-added effects derived from exports by the sector itself, from indirect exports via other sectors of the same country and from linkages into other countries’ stimulated exports. Overall, we find relatively large potential benefits. Yet, lacking forward linkages into other countries’ stimulated exports and the initial export specialisation are drivers of cross-country differences. The sectoral structure of the value-added benefits depends additionally on exporters’ backward linkages, which we find to be highly heterogeneous across countries.