The paper
This paper develops broad measures of bilateral trade costs from trade and production data for 167 countries. It compares manufacturing and agriculture and examines how trade costs differ across income groups and regions.
Research findings
- Low-income countries and Sub-Saharan Africa face particularly high trade costs; among developing-country groups, only upper-middle-income economies reduced costs faster than the rest of the world.
- Regional trade agreements, maritime connectivity, and trade facilitation are important correlates of lower trade costs.
Policy takeaways
- Target the full cost of reaching foreign markets, including transport and border processes, alongside tariffs.
- Adapt priorities to countries’ income levels and transport connections rather than assuming a single reform package fits every economy.