Moving forward faster : trade facilitation reform and Mexican competitiveness

"Improved competitiveness is at the top of the agenda for Mexico as it moves to leverage economic progress made over the past decade. The authors evaluate the impact of changes in trade facilitation measures on trade for main industrial sectors in Mexico. They use four indicators of trade facilitation: port efficiency, customs environment, regulatory environment, and e-commerce use by business (as a proxy for service sector infrastructure). The authors use gravity model results to consider how much trade among countries might be increased under various scenarios of improved trade facilitation. They follow a simulation strategy that uses a formula to design a unique program of reform for each country in the sample, and apply it to the case of Mexico. The formula brings the below-average countries in the group half-way to the average for the entire set of countries. After simulating these improvements in trade facilitation in all four areas, the authors find that the total increase in trade flow in manufacturing goods is estimated to be