Casual observation suggests that intra-national trade costs remain high in low- and middle-income countries. Precisely estimating them is crucial for guiding policies aimed at optimizing economic efficiency within a country's borders. This paper estimates intra-national trade costs for six low- and middle-income countries in Africa and Eastern Europe: Kenya, Madagascar, Nigeria, Rwanda, Tanzania, and Georgia. The analysis exploits unit-level price data collected by countries’ national statistical offices for consumer price index calculation purposes. It applies the price differential methodology, which aims at estimating trade costs while accounting for the possibility of imperfect competition among intermediaries, controlling for spatial variation in markups. The findings show that the intra-national trade costs in the sample of countries are between 2.5 and 14 times larger than previous estimates for the United States using the same methodology.
Authors
- Citation
- “ Díaz de Astarloa, Bernardo ; Pkhikidze, Nino . 2024 . Intra-national Trade Costs in Low- and Middle-Income Countries . Policy Research Working Paper; 10789 . © Washington, DC: World Bank . http://hdl.handle.net/10986/41654 License: CC BY 3.0 IGO . ”
- Collection(s)
- Policy Research Working Papers
- DOI
- https://doi.org/10.1596/41654
- Identifier externaldocumentum
- 34332635
- Identifier internaldocumentum
- 34332635
- Published in
- United States of America
- RelationisPartofseries
- Policy Research Working Paper; 10789
- Report
- WPS10789
- Rights
- CC BY 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by/3.0/igo/
- UNIT
- ITRGK - Global Knowledge (ITRGK)
- URI
- https://hdl.handle.net/10986/41654
- date disclosure
- 2024-06-04
- region geographical
- World
Files
Table of Contents
- Introduction 4
- Data 6
- Price data 6
- Products' origin locations 6
- Distance between locations 9
- Methodological framework 9
- Theory 10
- Estimation strategy 11
- Estimates of intra-national trade costs 12
- Spatial price gaps 13
- Pass-through rates 13
- Estimates of trade costs using pass-through-adjusted price gaps and distance 16
- Discussion of results and robustness checks 19
- Robustness checks 20
- Comparison to previous literature 22
- Conclusion 23
- Appendix 25
- Data selection and processing 25
- Product lists 29
