Paper long abstract:

This paper analyses the economic impact of trade costs on agrifood exports from the Central Asian countries between 2005 and 2017. The study employs a structural gravity model incorporating the World Bank's Doing Business indicators for cost to export and time to export to test four hypotheses: (1) remoteness inhibits Central Asian countries' engagement in global trade, (2) cost to export impacts on Central Asian countries more than on the rest of the world, (3) the impact of time to export is higher on perishable as opposed to non-perishable goods, and (4) changing definitions and measurement of Doing Business trade costs variables produce different results regarding the impact on export volumes. Initial econometric results for the decade 2005 - 2014 gave strong support to the first hypothesis, but conflicting evidence on the second and third hypotheses. Unexpected results included positive coefficients, in some cases statistically significant, for the relationship between trade costs and exports from Central Asia. Noting that the Doing Business methodology was revised in 2016, the models were repeated using data from 2015 to 2017. For perishable goods (tomatoes and grapes) the coefficients on trade costs were negative, statistically significant and with a larger impact in Central Asia than the rest of the world. For non-perishable goods (wheat and cotton) the results were not statistically significant. In sum, more recent Doing Business trade cost measurements support better our three hypotheses. The results cast doubt on the suitability of using the pre-2016 Doing Business methodology on trade costs in the Central Asian context.

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