Time as a Determinant of Comparative Advantage

36 Pages Posted: 20 Apr 2016

See all articles by Yue Li

Yue Li

World Bank

John S. Wilson

World Bank - Development Research Group (DECRG)

Date Written: November 1, 2009

Abstract

It is assumed that added time to export adds cost to and lowers the volume of trade. Time delays may also affect the composition of trade and can disproportionately reduce trade in time-sensitive goods. This paper investigates the validity of these propositions using the World Bank Doing Business database and Enterprise Surveys for 64 developing countries. The authors find that in countries where there is longer time needed to export firms in time-sensitive industries are less likely to become exporters. Moreover, firms that do export have lower export intensities. Their findings imply that time to export is a significant determinant of comparative advantage. For example, consider two industries that have the same export probability and intensity - but differ in time-sensitivity by one standard deviation. Action taken to cut time to export by 50 percent for one industry opens a 6 percentage point difference between the export probabilities of the two industries. In addition, steps to cut time delays increase export intensities by 1.9 percentage points. This impact applies to industries with different productivity levels -- and those in developing countries with different income levels.

Keywords: Transport Economics Policy & Planning, Economic Theory & Research, Scientific Research & Science Parks, Science Education, Free Trade

Suggested Citation

Li, Yue and Wilson, John S., Time as a Determinant of Comparative Advantage (November 1, 2009). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2009. Available at SSRN: https://ssrn.com/abstract=1509195

Yue Li

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

John S. Wilson

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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