Impact of high trade costs and uncertain time to trade on exports from five Central Asian countries

Failure of the newly independent Central Asian countries to diversify their exports after the demise of the former Soviet Union is usually ascribed to high trade costs, whether due to the geographical disadvantage of being landlocked or to border delays and other regulatory obstacles. This paper estimates the impact of high export costs in five Central Asian countries. It uses a structural gravity model with trade cost variables from the trade facilitation indicators of the Corridor Performance Measurement and Monitoring (CPMM) mechanism. The results demonstrate that uncertain time to export, expressed as a standard deviation of the exporting time, has a strong negative impact on exports of goods from these countries. Moreover, time-sensitive, perishable agricultural products are confirmed to be strongly impacted by uncertain time to export, while textile and apparel commodities are highly sensitive relative to other commodities to high costs to export. Finally, the CPMM indicators are susceptible to applying a strict fixed effects approach when compared with the more relaxed techniques, which emphasizes the importance of using the most recent advances in the gravity model.