Trade facilitation, regulatory quality export performance: empirical investigation for South Asian countries.
Ahmad, Mohsin Hasnain ; Ahmed, Qazi Massod
1. INTRODUCTION
In the recent decades trade facilitation has become an imperative
part of the current debate on trade liberalization policy particularly
in developing economies. Considering the importance of trade
facilitation, within the Doha Round negotiation of WTO, is one of the
important "implementation related issues as well as concerns".
The Official declaration of meeting realized how crucial it is to
develop the capacity of developing member countries and equip them
technically in order to enjoy maximum benefits of trade liberalization.
To enhance the capacity as well as upgrade trade-related infrastructure
of developing countries they need to help them to get benefit from WTO
agreements and move swiftly to enhance their trade (WTO, 2006).
Trade liberalization is one of the important policy advise opted in
developing countries over the last few years. The enormous increased in
international trade due to reduction in tariff rates which has created a
challenging situation for custom administration, particularly associated
with effectiveness and efficiency of customs' processing. Trade
transaction costs are a key factor in explaining the pattern of
international trade flows. (1) There is various indirect and direct
transactions costs involved in international trade, contributing around
15 per cent of the value of traded good (OECD, 2003). In such scenario,
trade facilitation is considered as an effective policy tool for
reducing the transaction costs through the removal of non-tariff
barriers and improvements to the trade administration system. These
reforms are designed to ensure that traded goods flow across the borders
in a smooth, well-timed and at relatively lower cost. (2) Although the
potential benefits of trade facilitation are observable but the
implementation of these measures must be complemented with other reforms
in order to improve the export performance of developing countries. (3)
World Bank (2009) reported that enterprises in most SAARC countries
spend much more time and documents require in export procedure than do
their business rivals in developed countries. For example in SAARC
economies, on average, it takes 33 days with 8 documents and cost around
1314 US $ per container to export, while in OECD countries a similar
good would only take 7 days to export , require four documents and cost
around 896 US $ per container for export (Doing Business 2012).
Cumbersome customs procedures, weak trade related infrastructure or
troublesome regulatory requirements represent a negative externality on
private transactions which can increase significantly trade related
transaction costs and eventually distort industrial production with
adverse effects on economic growth.
Historically, SAARC's export performance in terms of share in
global context is disappointing. The region's share in total world
export is small and falling till 1990. The merchandise export of SAARC
countries and its share in the world exports, except India all other
countries export's share less than one per cent in the world
exports. The share of SAARC countries in world export steadily decrease
from 3.7% in 1950 to 0.8% in 1990 and then gradually increase and reach
to 2% in world exports in 2011 however still its share is not much
significant as compared to other developing Asian economies. (4)
South Asia has poor trade facilitation indicators and weak
institutional structure seem to hurdle to facilitate the export growth
in member countries. The present study investigates impact of trade
facilitation and regulatory quality on export performance of South Asian
countries. In recent literature, no study is so far has examined this
link particularly for South Asian countries by employing panel data
estimation techniques.
The plan of the paper is as follows: Trade facilitation indicators
and Global competitiveness index are presented in section 2. Sector 3
provides a succinct review of literature. Data description and
methodology is explained in section 4. Empirical results are reported in
the section 5 and section 6 presents a concluding summary and some
policy implications that emerge from the study.
2. TRADE FACILITATION INDICATORS AND GLOBAL COMPETITIVENESS INDICES
2.1. Trade Facilitation Indicators
Keeping in view the competitiveness of South Asian countries with
their trade rivals from developed part of the world, the South Asian
countries are more time and cost inefficient in import and export
procedures. The relatively high costs and time delays in doing business
in South Asia are not only associated to disadvantageous geographic
location but also linked with administrative hurdles, poor logistics and
cumbersome documentation and procedures.
An analysis of trade facilitation indicators is performed for SAARC
and selected OCED countries in Table 1 and Table 2 respectively. The
trading across boarder measures are based on documents require
(numbers), time require (days) and per container cost for
export/imports. Trade facilitation indicators are reported for exports
and import in order to make comparison between countries and regions.
For instance, in some South Asian countries, the cost to export one
container is more than $ 1700, which is more than two times average cost
in OECD countries. The situation is even worse in terms of transaction
time; average time spent on export procedures in SAARC countries is
almost five times longer than that in OECD countries. In some SAARC
countries, it takes more than 40 days to complete export procedures.
Situation is not different for import side; the cost and average time to
import for some economies are two times and five times longer
respectively as compared to OECD countries. The cumbersome procedure and
documents required for export and import also create the hurdle in
facilitating the trade in SAARC region. Documents required for export
and import in SAARC region is two times higher than OECD countries.
Country specific trade facilitation index show that there is cross
countries variation in their sub components. For instance, Sweden
requires least documents (i.e. 3 documents) for exports while for
imports Sweden and Denmark requires least documents among reported
countries. Afghanistan requires highest document i.e. 10 documents for
exports and Bhutan requires 12 documents for imports. In the term of
cost of trade, it is least in Finland for both exports and import (i.e.
$482for exports and $528 for imports) whereas it is highest in
Afghanistan for both exports and imports (i.e. $2763 for exports and
$2794 for imports). Time requires to export / import is also an
important indicators, the analysis shows that Denmark take least time
for trade i.e. 5 days and Afghanistan requires the most time i.e. 71 day
for exports and 76 days for imports.
2.2. Global Competitiveness Indices
Many indices have been constructed by international and regional
organizations to assess country's competitiveness. The World
Economic Forum has developed the
Global Competitiveness Index (GO) to explore the competitive
strengths of a country and the barriers which affects its economic
performance.
Table 3 and Table 4 represent Global Competitive Index (GCI) and
the rank of selected South Asian countries and OCED countries
respectively, it is clear from the tables, performance of OCED countries
based on GCI is much better than South Asian countries. Further, we
observe that performance of OECD countries is very impressive and their
rank is among top fifteen countries in the world while performance of
SAARC economies is very disappointed.
Table 5 and Table 6 show three sub-component of GCI, that are
Judicial Independence (JI) index that related to 'rule of law'
and shows to what extent is the judiciary in a country is independent
from influences of members of government or enterprises. Reliability of
police services (RPS) indicator depicts the extent by which police
services can be trusted upon for the enforcement of law and order in a
country. Burden of government regulations (GR) index represents the
impediments faced by businesses in a country to abide by governmental
administrative requirements (e.g., rules, licenses and permits, and
monitoring and reporting).
It can be observed from table 5 that ranking of OECD on the basis
of reliability of police service (RPS) and Judicial Independence (JI)
indicators is much better than the South Asian countries. Within the
OCED countries the ranking for reliability of police service (RPS) of
the Switzerland and Netherland has improved in 2012-13 compared to
2006-07 while the ranking of Germany, United Kingdom and United States
has reduced during the same period. United States has experienced
highest decrease in ranking during this period. Ranking for Judicial
Independence (JI) has decreased for all the OECD countries in 2012-13
compared to 2006-07.
It can be observed that Sri Lanka and Pakistan has shown
improvement in the ranking of Judicial Independence during 2012-13
compared to 2006-07. Ranking for Reliability on Police Service delivery
in Sri Lanka has improved while for other countries it has decreased in
2012-13 compared to 2006-07.
Table 6 highlights the burden of government regulation (GR); we can
see that in business there are more cumbersome procedures and
regulations in SAARC countries as compared to OECD countries.
3. BRIEF REVIEW OF LITERATURE
3.1. Trade Facilitation and Trade Performance
In most of the developing countries there has been a visible change
in trade policies, switching from import substitution to export-oriented
policy. We observe a visible reduction in tariff rates in last three
decades, resulting in expansion of global trade and the increase in
supply chain management practices have resulted in concerns with the
impact of on-the-border and inside-the-border transaction costs on
international trade. There are many empirical studies available in the
literature available that shows the trade facilitation reforms matter
for international trade flows. Norda's et al. (2006) investigates
the association between processing time for international trade. They
find that time delays have negative impact on trade volumes and it also
reduces the probability to enter export markets for time-sensitive
products. Clarke (2005) investigates the factors that affect the export
performance of the African countries, and finds that manufacturing firms
are more attractive to export in countries with well functioning customs
administrations and impose less restriction on international trade.
Tomasz iwanow and Colin Kirkpatrick (2007) find that trade facilitation
along with other reforms are significant impact on export performance of
the developing countries.
3.2. Institutional Quality and Trade Performance
The association between quality of institutions and trade is
recognized in economic literature. North (1991) argues that institutions
influence economic activities through the channels of transaction and
production costs. Building on theoretical contribution in literature of
North, there has been a growing interest among researchers to
investigate quality of institutions as determinants of international
trade flows. Anderson and Marcouiller (1997) point out that channel
through which institutions can affect trade is by reducing risks
associated with international transactions. Anderson and Young (1999)
show that if enforcement of contracts is weak, it may reduce trade by
acting as a tariff on risk-neutral traders. This analysis is supported
by Rodrik (2002) who shows that lack of contract enforcement indeed
reduces international trade because it is particularly helpful in smooth
international transactions involving traders in different countries with
different legal and political structures. Similarly, a study by Anderson
and Marcouiller (2002) suggest that strong institutions, particularly,
capable legal systems, neutral formulations and implementations of
government economic policies, positively contribute to the growth of
trade. Jensen and Nordas (2004) find a positive correlation between
quality of institutions and trade levels. Freund and Bolaky (2002)
finding suggest that in economies with good regulatory quality, trade
enhances growth. They show that if quality of institutions declines, it
acts an additional positive mark-up on the price of exports which, in
turn, results in reduced export demand and export earnings.
There are also some indirect channels which explain the linkages
between institutional quality and growth of international trade (Rodrik,
1995; and Elbadawi, 1998). Investment is an important determinant of
trade, any change in institutional quality effects investment and
induces indirect effect on international trade (Brunetti and Weder,
1998; Mauro, 1995; and Knack and Keefer, 1995).
4. DATA DESCRIPTION AND MODEL SPECIFICATION
4.1. Data Description
4.1.1. Trade Facilitation Index
For the Trade facilitation measures (TF), we used the Doing
Business database of the World Bank. The originally trading across
boarder measures consists of the following each three components of
export and imports. (5)
* Number of documents essential for export and import goods;
* Time required to complete all procedures for export and import
goods;
* Cost associated with all the procedures required for export and
import goods.
We have constructed a single index of trade facilitation from above
indicators. An important aspect of this single measure of trade
facilitation is that it captured different dimension time and cost of
custom procedures. The original data of trading across boarder
indicators have different units and scales and also some components are
time invariant. In order to ensure compatibility among the various
indicators used, all indicators are rescaled to vary from 0 to 10, in
such a way, so that better trade facilitation corresponds to higher
values of the index. Moreover, single indicator of trade facilitation is
time variant, which is suitable for empirical purposes.
4.1.2. Regulatory Quality
The indicator of regulatory quality (RQ) is taken from Worldwide
Governance Indicators of World Bank which directly measure regulatory
quality. The regulatory quality index captures perceptions of the
capability of the government in formulation and implementation of sound
policies and regulations that allow and encourage the development of
private business sector. This data source covers all SAARC countries
whereas other sources such as World Economic Forum (WEF) is not
reporting required variable for all SAARC countries.
4.1.3. Other Variables
Export of good and services (EX) is used as dependent variable. The
other important variables are incorporated in the model suggested by
literature that might affect export performance. GDP per capita growth
of trading partner (GPC), trade openness (OP) as proxy of
(import+export/ GDP) and infrastructure quality (INF) are taken World
Development Indicator (WDI) whereas Real effective exchange rate (REER)
is obtained from Bruegel.org.
4.2. Model Specification
To examine the potential relationship between trade facilitation,
regulatory quality and export performance, we have used Fixed Effect
Method (FEM) and Generalized Moment Method (GMM) to estimate the model.
Fixed effects regressions are preferable not only because they control
for all time-invariant factors but also they use only within-country
variation in the data for estimation. Due to the endogenous nature of
trade facilitation, one may also be concerned that a rise in volume of
international trade can generate additional pressure on customs
administration for the provision of efficient services. Therefore, we
adopt the GMM to control for the potential endogeneity problem between
export and trade facilitation. To evaluate the effect of the trade
facilitation and regulatory quality on exports performance of the South
Asian countries, we have estimated the following model over the period
2004 to 2012.
[EX.sub.it] = [[alpha].sub.i] + [[alpha].sub.2] [GPC.sub.it] +
[[alpha].sub.2][REER.sub.it] + [[alpha].sub.3][TO.sub.it] +
[[alpha].sub.4][INF.sub.it] + [[alpha].sub.5][TF.sub.it] +
[[alpha].sub.6][RQ.sub.it] + [[alpha].sub.7][TF.sub.it]* [RQ.sub.it] +
[[mu].sub.it]
Where:
EX = Export of good and services
TF = Trade facilitation Index
RQ = Regulatory quality
TO = Trade openness
REER = Real effective exchange rate
GPC = GDP per capita income growth of trade partners
INF = physical infrastructure
Where EXir is country i's ratio of exports of goods and
services for year t. REERti stands for country i's real effective
exchange rate for year t. GiPCit measures the GDP per capita income
growth country i's trade partners. TO indicates the trade openness
measure for country i's for year t. TFit and RQit stands for an
index of trade facilitation and regulatory quality of country i's
for year t, respectively. INFit is the physical infrastructure for
country i's for year t. Finally, to capture the complementary
relationship between trade facilitation and regulatory quality,
interaction term (TF*RQ) is incorporated in the model.
5. EMPIRICAL RESULTS
The estimated results from FEM and GMM are reported in column 1 and
2 of Table 8, respectively. (6) The estimated results from FEM and GMM
are broadly the same, as all variables have the expected sign and are
significant at the 1% or 5% level. The exception is the coefficient for
REER, which is negative but not significant.
The empirical finding reveal that trade facilitation has a
statistically significant, suggesting that the trade facilitation does
matter over time for export performance in case of SAARC countries. The
estimated coefficient of trade facilitation from FEM and GMM reveals
that one per cent improvement in the trade facilitation (TF) yield
(0.43) and (0.29) per cent increase in export respectively. The
coefficient of regulatory quality (RQ) is significant at the 1% level,
indicating a positive linkage with export flows. The estimated
coefficient of regulatory quality (RQ) from FEM and GMM implies that a
one per cent improvement in regulatory environment raises exports by
(0.12) and (0.32) per cent respectively.
The paper also examined the complementary relationship between
trade facilitation and regulatory quality (TFRQ) to promote export
growth. The findings of FEM and GMM reveal that their combine impact
exert significant positively related to export growth. Empirical results
suggest that simultaneously implementation of these policies would
marvelous performance of export. The coefficient of interaction term
(TF*RQ) is significant and indicates that joint impact one per cent
improvement in trade facilitation and regulation quality expand export
performance by (1.35 and 1.05) per cent. The result highlights the
importance of the complementary policies on export performance. This
confirms that trade facilitation reforms are crucial if they are
complemented with other reforms such as regulatory quality.
Partial effect of trade openness (OP) exerts a positive and
significant impact on export performance in SAARC economies. This
endorses the importance of a liberal trade regime to enhance export
growth. (7) Similarly, GDP per capita growth (GPC) and physical
infrastructure (IR) also appears to be significantly positive related to
export. The exception is REER, which has the expected negative sign but
is no longer significant. This result implies towards an interesting
policy implication that devaluation or depreciation may not seem an
effective tool for export performance for SAARC economies.
6. SUMMARY AND CONCLUSIONS
Tariff rates have been reduced globally over the last few years,
which have consequently resulted in huge increased in international
trade. However, the economic performance has varied across countries,
suggesting that country-specific factors have important role in
determining an economy's response to capture trading opportunities.
The rapid growth in international trade has created a challenging
situation for customs administration to provide efficient services for
international trade. The significance of trade facilitation and trade
regulations, other reforms has become more evident with passage of time.
The present study explores impact of trade facilitation and other
reforms on export performance of South Asian economies. Findings support
that the trade facilitation and regulatory quality have important role
to play in facilitating export growth in South Asian countries.
Empirical findings confirm the important link between trade facilitation
measures, regulatory quality and export performance. Trade openness, GDP
per capita income of trade partners and physical infrastructure are also
emerged important determinants of export performance of SAARC region.
Furthermore, our findings suggest that trade facilitation reforms are
crucial if they are supplemented with institutional reforms and in this
way it can enhance an economy's capacity to respond to the export
market opportunities created by trade liberalization policies. One of
the important aspects of the previous studies is that they use aggregate
data of export for empirical analysis; however, impact of trade
facilitation reforms may vary across sector wise export. Therefore, it
would more valuable to explore the impact of trade facilitation on
sectoral export performance for future research.
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Notes
(1.) See (Obsfeld and Rogoff, 2000; Deardorff, 2004).
(2.) There is no generic definition available to describe trade
facilitation and its scope. Narrowly defined, trade facilitation is
associated with the reduction of transaction costs (on the border) other
than tariff rates, which are essentially comprised of simplification,
standardization, and harmonization of trade documents and formalities
related to international trade. Broadly defined, trade facilitation not
merely comprised of at-the border issues, but also beyond-the-border
issues, exposure with external trade and commerce, infrastructural
quality ,quality of institutions, and domestic rules and regulations
(See OECD (2005), UNCTAD (2001).
(3.) The importance of institutions in shaping the outcome of
policy reform measures is well recognized in literature. Capacity
building and institutional reforms are important component of the
'new' Washington consensus (Rodrik, 2006; Jalilian et al.,
2007).
(4.) See Appendix Table 9 and Table 10.
(5.) Documents Needed (Numbers) : Customs clearance documents,
banks documents, port and terminal handling documents and transport
documents.
Time Require (Days) : Acquire all documents ,inland transport and
handling, customs clearance and inspections, port and terminal handling
,ocean transport time is not added.
Cost Require (US $ per Container): All documents, inland transport,
customs clearance procedure and inspections, port and terminal handling,
official cost excluding bribes.
(6.) The Hausman test statistic is [chi square] = 25.9 (p = 0.000),
it shows that Fixed Effect Method is more appropriate than Random
Effects Method.
(7.) Trade liberalization is significant and positively associated
with export growth (Thomas et al., 1991; Weiss, 1992; Joshi and Little,
1996; Ahmed, 2000, Santos-Paulino, 2002 and Ahmad, Mohsin H., 2010).
Appendix
Table 9
Trends of Merchandise Export (US $ Millions)
1950 1960 1970 1990
Afghanistan 53 50 86 235
(0.09) (0.04) (0.03) (0.01)
Bangladesh 274 325 519 1671
(0.44) (0.25) (0.16) (0.05)
Bhutan -- -- -- 70
(0.002)
India 1145 1332 2026 17969
(1.85) (1.02) (0.64) (0.52)
Maldives 2 2 4 78
(0.003) (0.001) (0.001) (0.002)
Nepal 1 17 42 175
(0.002) (0.01) (0.01) (0.005)
Pakistan 489 394 397 5589
(0.79) (0.31) (0.13) (0.16)
Sri-Lanka 328 385 342 1912
(0.53) (0.23) (0.11) (0.05)
SAARC Region 2292 2504 3416 27700
(3.71) (2.00) (0.94) (0.80)
Developing Economies 21051 31714 60334 840994
(34.04) (24.40) (19.03) (24.17)
Developed Economies 38830 97786 242202 2519069
(62.80) (71.98) (76.40) (72.42)
2000 2011
Afghanistan 137 350
(0.001) (0.001)
Bangladesh 6389 24564
(0.10) (0.13)
Bhutan 103 620
(0.001) (0.003)
India 42379 322644
(0.66) (1.66)
Maldives 109 346
(0.002) (0.002)
Nepal 804 918
(0.01) (0.005)
Pakistan 9028 25344
(0.14) (0.14)
Sri-Lanka 5430 10011
(0.08) (0.05)
SAARC Region 64379 364798
(0.99) (2.00)
Developing Economies 2052172 7785920
(31.84) (42.75)
Developed Economies 4238022 9597894
(65.76) (52.71)
Source: UNCTAD (2011)
Note: Author's Calculations. Figure in parentheses is the share
in total world exports.
Table 10
Trends of Sector Wise Export (US $ Billions)
Countries Sector Wise Export 1995 2000 2005 2011
Primary 0.14 0.12 0.28 0.18
Afghanistan Manufacturing 0.03 0.02 0.05 0.15
Services -- -- -- --
Primary 0.41 0.58 0.73 2.14
Bangladesh Manufacturing 2.96 5.80 8.58 23.75
Services 0.70 0.82 1.25 2.65
Primary 0.03 0.05 0.13 0.36
Bhutan Manufacturing 0.07 0.05 0.13 0.26
Services 0.01 0.02 0.04 0.08
Primary 7.98 8.59 28.36 102.85
India Manufacturing 18.45 26.02 58.56 151.73
Services 6.77 16.69 52.53 137.15
Primary 0.06 0.03 0.13 0.32
Maldives Manufacturing 0.03 0.08 0.02 0.02
Services 0.23 0.35 0.32 0.85
Primary 0.03 0.08 0.28 0.33
Nepal Manufacturing 0.30 0.47 0.61 0.59
Services 0.68 0.51 0.38 0.86
Primary 1.37 1.39 2.91 7.24
Pakistan Manufacturing 6.77 7.80 13.12 18.10
Services 1.86 1.38 3.68 5.04
Primary 0.92 1.18 1.72 3.09
Sri-Lanka Manufacturing 2.62 3.91 4.02 6.46
Services 0.82 0.94 1.54 3.08
Source: UNCTAD (2011), Complied by authors
MOHSIN HASNAIN AHMAD * AND QAZIMASSOD AHMED **
* Assistant Professor/Research Economist, Applied Economics
Research Centre, Karachi University, Pakistan, E-mail:
mohsinku@hotmail.com
** Professor/Research Director at Institute of Business
Administration (IBA), Karachi, Pakistan
Table 1
Trade Facilitation Indicators for SAARC Countries
Average Over the Period (2004-2012)
Documents Time to Cost to Exports Documents
to Exports Exports (US $ Per to Imports
(Number) (Days) Container) (Number)
Afghanistan 10 71 2763 10
Bangladesh 8 29 906 8
Bhutan 8 38 1476 12
India 8 20 941 9
Maldives 8 21 1342 9
Nepal 9 42 1750 9
Pakistan 7 23 646 8
Sri-Lanka 6 22 688 7
Average 8 33 1314 9
Time to Cost to
Imports Imports
(Days) (US $ Per
Container)
Afghanistan 76 2794
Bangladesh 38 1282
Bhutan 38 2304
India 26 1059
Maldives 21 1487
Nepal 35 1870
Pakistan 21 623
Sri-Lanka 21 707
Average 35 1516
Source: Doing Business (World Bank)
Author's calculations
Table 2
Trade Facilitation Indicators for Selected OECD Countries
Average over the Period (2004-2012)
Documents Time to Cost to Exports Documents
to Exports Exports (US $ Per to Imports
(Number) (Days) Container) (Number)
Denmark 4 5 684 3
Finland 4 8 482 5
Germany 4 7 808 5
Luxembourg 5 6 1363 4
Netherlands 4 6 888 5
Norway 4 7 718 4
Sweden 3 8 639 3
Switzerland 4 8 1409 5
United Kingdom 4 8 969 4
United States 4 6 1003 5
Average 4 7 896 4
Time to Cost to
Imports Imports
(Days) (US $ Per
Container)
Denmark 5 684
Finland 8 528
Germany 7 856
Luxembourg 6 1363
Netherlands 6 985
Norway 7 526
Sweden 6 685
Switzerland 9 1446
United Kingdom 7 1200
United States 5 1239
Average 7 951
Source: Doing Business (World Bank)
Author's calculations
Table 3
Global Competitiveness Index and Rank for Selected SAARC Countries
Period Bangladesh India Nepal
GCI RANK GCI RANK GCI RANK
2006-07 3.71 92 4.47 42 3.45 104
2007-08 3.55 107 4.43 43 3.38 114
2008-09 3.51 111 4.33 50 3.37 126
2009-10 3.55 106 4.30 49 3.34 125
2010-11 3.64 107 4.33 51 3.34 130
2011-12 3.73 108 4.30 56 3.47 125
2012-13 3.65 118 4.32 59 3.49 125
Period Pakistan Sri Lanka
GCI RANK GCI RANK
2006-07 3.82 83 3.85 81
2007-08 3.77 92 3.99 70
2008-09 3.65 101 4.02 77
2009-10 3.58 101 4.07 79
2010-11 3.48 123 4.25 62
2011-12 3.58 118 4.33 52
2012-13 3.52 124 4.19 68
Source: Global Competitiveness Report
Table 4
Global Competitiveness Index and Rank for Selected OECD
Countries
Period United State United Kingdom Switzerland
GCI RANK GCI RANK GCI RANK
2006-07 5.80 1 5.56 2 5.54 4
2007-08 5.67 1 5.41 9 5.62 2
2008-09 5.74 1 5.30 12 5.61 2
2009-10 5.59 2 5.19 13 5.60 1
2010-11 5.43 4 5.25 12 5.63 1
2011-12 5.43 5 5.39 10 5.74 1
2012-13 5.47 7 5.45 8 5.72 1
Period Netherland Germany
GCI RANK GCI RANK
2006-07 5.37 11 5.48 7
2007-08 5.40 10 5.51 5
2008-09 5.41 8 5.46 7
2009-10 5.32 10 5.37 7
2010-11 5.33 8 3.39 5
2011-12 5.41 7 5.41 6
2012-13 5.50 5 5.48 6
Source: Global Competitiveness Report
Table 5
Sub-Components of Global Competitiveness Index (GCI) and
its Rank
Country Reliability of Police Services
2006-07 2012-13
Rank Value * Rank Value *
Bangladesh 119 2.33 126 2.96
India 48 4.44 69 4.27
Nepal 99 3.07 108 3.48
Pakistan 96 3.13 127 2.96
Sri Lanka 94 3.17 72 4.19
Germany 4 6.14 20 5.91
Netherland 16 5.52 6 6.23
Switzerland 6 6.26 2 6.38
UK 21 5.46 23 5.86
United State 12 5.84 30 5.55
Country Judicial Independence
2006-07 2012-13
Rank Value ** Rank Value **
Bangladesh 97 2.58 104 2.84
India 18 5.6 45 4.52
Nepal 51 4.1 89 3.28
Pakistan 81 3 57 4.1
Sri Lanka 74 3.26 56 4.1
Germany 1 6.39 7 6.24
Netherland 2 6.25 3 6.44
Switzerland 7 6.12 6 6.28
UK 8 6.11 11 6.19
United State 31 5.17 38 4.49
Source: Global Competitiveness Report
Note: Minimum index value is one and maximum value is seven
* 1 = people cannot be relied upon at all; 7 = people can be
completely relied upon
** 1 = heavily influenced judiciary; 7 = entirely independent
judiciary
Table 6
Burden of Government Regulations
2006-07 2008-09
Country Rank Value *** Rank Value ***
Bangladesh 108 2.44 114 2.55
India 75 2.84 90 2.93
Nepal 73 2.85 89 2.96
Pakistan 70 2.86 78 3.06
Sri Lanka 36 2.68 44 3.51
Germany 63 2.88 77 3.06
Netherland 48 3.13 81 3.01
Switzerland 13 3.93 11 4.45
United Kingdom 47 3.13 82 3
United State 23 3.58 50 3.44
2010-11 2012-13
Country Rank Value *** Rank Value ***
Bangladesh 102 2.89 85 3.20
India 95 2.99 98 3.04
Nepal 114 2.69 86 3.19
Pakistan 72 3.24 62 3.44
Sri Lanka 68 3.33 45 3.76
Germany 92 3.03 71 3.38
Netherland 77 3.13 34 3.90
Switzerland 14 4.21 16 4.29
United Kingdom 89 3.06 72 3.37
United State 49 3.48 76 3.33
Source: Global Competitiveness Report
Note: Minimum index value is one and maximum value is seven
*** 1 = extreme burden of government regulations; 7 = No burden
of government regulations
Table 7
Trade Facilitation Index
2006 2007 2008 2009 2010 2011
Afghanistan 2.35 2.59 2.59 1.70 1.31 0.64
Bangladesh 6.95 6.95 7.94 7.84 8.01 7.94
Bhutan 5.08 5.08 5.08 5.01 5.01 4.14
India 6.73 6.73 7.73 7.70 7.70 7.61
Maldives 7.32 7.32 7.32 7.17 7.17 6.92
Nepal 5.42 5.42 5.42 5.31 5.34 5.11
Pakistan 7.63 8.56 8.56 8.52 8.52 8.55
Sri Lanka 8.60 8.60 9.35 9.30 9.30 9.33
Source: Doing Business (World Bank)
Author's estimations
Table 8
Dependent Variable: Exports of Good and Services
Explanatory Variables FEM (1) GMM (2)
Constant 2.31 ** 1.62 *
GPC 1.13 * 1.25 *
REER -0.05 -0.14
TO 0.12 * 0.75 **
INF 0.77 * 1.65 **
TF 0.43 * 0.29 *
RQ 0.12 ** 0.32 *
TF *RQ 1.35 * 1.03 *
R-Square 0.73 0.71
Note: ** And * indicate significance at the 5% and 1% levels,
respectively
