What constrains Africa's exports? Preliminary and incomplete

Abstract What is the binding constraint to Africa's exports: transit, paperwork, or ports and customs costs? We use detailed data on the breakdown of trade times to answer this question. We find that transit costs are the most constraining. A one percent reduction in inland travel times leads to a 1-2 percent increase in exports. Put another way, a one day reduction in inland travel times translates into nearly a three percentage point reduction in all importing country tariffs. In contrast, higher times in the other areas are not robustly significant in reducing exports. We control for the possibility that greater trade leads to improvements in transit in a three ways. First, we examine the effect of trade costs in a transit country on the exports of landlocked countries. Second, we use a sample of food products, ranging from perishable goods where time is most critical to preserved goods, and show that transit costs reduce exports by relatively more for goods with a shorter lifespan. Third, we show that transit times have a greater effect on existing exports, while other costs also affect new exports. One explanation for the domination of transit is that it is associated with more uncertainty than other costs. Our results imply that improvements in moving goods inland must be included in trade facilitation programs in Africa