Trade facilitation and global value chains in a post-pandemic world

The objective of this paper is twofold. First, it examines the effects of the implementation of trade facilitation (TF) measures on international trade flows and on participation in global value chains (GVCs). Second, it provides policy recommendations for developing Asia and the Pacific derived from model estimations. The main focus is to disentangle the effectiveness of a wide range of TF actions taken at a country level and see whether these have paved the way toward more sustainable trade flows. The data used are from the UN Global Surveys on Digital and Sustainable Trade Facilitation, covering 144 countries worldwide for the years 2015, 2017, 2019, and 2021. The empirical estimations obtained from a gravity model of trade indicate that TF measures related to transparency, institutions, and formalities are of utmost importance, whereas sustainable TF actions are still in their infancy, and more data are needed for a proper evaluation of their effectiveness. Moreover, the implementation of TF is related to reductions in the time and cost to export and import as well as to improvements in logistic performance. There are several policy recommendations and implications for developing Asia and the Pacific concerning TF, trade, and GVCs: first, transparency policies will increase trade in manufactured goods more than proportionally, especially in low-income countries in Asia (such as Afghanistan, Bangladesh, Bhutan, Cambodia, Lao PDR, Myanmar, Nepal, and Timor-Leste); second, improving the quality of TF-related institutions will foster participation in global value chains; and finally, for small islands in the Pacific (Kiribati, Solomon Islands, Tuvalu, and Vanuatu), public investments directed at improving their logistics performance would be of special relevance.