Trade Facilitation and Economic Growth Among Middle-Income Countries

Abstract

This study examined the relationship between trade facilitation and economic growth among the middle-income countries from 2010 to 2020 using 94 countries made up of 48 lower-middle-income countries and 46 upper-middle-income countries. The study utilized both difference and system Generalised Method of Moments (GMM) since the cross-sections (N) were greater than the periods (T). The study found that container port traffic, quality of trade and transport-related infrastructure have a strong influence on imports and exports of goods and national income while trade tariff hurts the growth of the countries. The study also found that most of the trade facilitation indicators indicated a weak positive influence on trade flows and economic growth. Based on these findings, the study recommends that reforms aimed at significantly lowering the costs of trading across borders among middle-income countries should be highly prioritized in policy formulations, with a focus on the export side by reducing at-the-border documentation, time, and real costs of trading across borders while the international organizations should continue to report the set of Trade Facilitation Indicators (TFIs) that identify areas for action and enable the potential impact of reforms to be assessed.