Carballo, Jerónimo Schaur, Georg Graziano, Alejandro Volpe Martincus, Christian
Year of Publication:
IDB Working Paper Series IDB-WP-704
In this paper, we estimate the effects of transit systems that substantially streamline administrative processing of trade flows. In so doing, we use a unique dataset that consists of the entire universe of El Salvador's export transactions over the period 2007-2013 and includes information on the transactions channeled under a new transit regime established with neighboring countries over the same period. Results suggest that this new transit system has been associated with decreased order servicing and variable trade costs. As a consequence, firms' exports increased primarily through higher shipping frequencies. Furthermore, the effects have been strong on foreign sales of time-sensitive goods. This evidence informs one of the main policies covered in the 2013 WTO Agreement of Trade Facilitation.
Transit Trade Border Effects Order Costs Inventory Shipping Frequency