Trading on Time: Reforms in Developing Countries Can Boost Exports
Developing country economies are suffering from long delays in moving standard cargo from the factory gate to ship, according to a new study from the World Bank and the International Finance Corporation (IFC).
Released in January 2006, "Trading on Time" introduces new trade research based on the data provided from the Doing Business in 2006: Creating Jobs report, an annual report co-sponsored by the IFC and the World Bank. The new study finds that each day of delays reduces a country's export volumes by about 1 percent. For example, if Burkina Faso reduced its factory-to-ship time from 71 days to 27 days (the median for the sample), exports may increase by nearly 45 percent. Similarly, if the Central African Republic reduced its median factory-to-ship time from 116 days to 27 days, exports would nearly double.
Delays have a great impact on a developing country's exports, especially perishable agricultural products. A day's delay reduces exports of highly perishable agricultural goods, such as corn, apricots, and cucumbers, by 7 percent, as compared to agricultural goods with a longer storage life, such as potatoes or apples. This makes it unlikely that many countries, particularly in Africa, will be able to benefit significantly from existing duty-free access provisions or from future trade liberalization in OECD agricultural markets under a WTO agreement -- unless export procedures are simplified.
"Trading on Time" highlights the need to focus aid for trade in developing countries on improving trade facilitation; removing obstacles to exporting will broaden market opportunities for the private sector. The study also illustrates the potential gains from addressing the trade facilitation agenda in trade agreements, including through the WTO.