Transit Trade

Jun 2016
In this paper, we estimate the effects of transit systems that substantiallystreamline administrative processing of trade flows. In so doing, we use a
unique dataset that consists of the entire universe of El Salvador's export
transactions over the period 2007-2013 and includes information on the
transactions channeled under a new transit regime established with
neighboring countries over the same period. Results suggest that this new
transit system has been associated with decreased order servicing and
variable trade costs. As a consequence, firms' exports increased primarily
through higher shipping frequencies. Furthermore, the effects have been
strong on foreign sales of time-sensitive goods. This evidence informs one
of the main policies covered in the 2013 WTO Agreement of Trade