Logistics Costs and Competitiveness
Executive Summary
This paper examines the issue of measuring logistics costs from an applied
trade policy research perspective, as well as identifying logistics-intensive
sectors. It focuses on currently available data at the macro- and firm-levels.
Data sources considered include national accounts, national input-output
tables, the International Comparison Project, firm-level data, and production
and trade data. Although current data exhibit a number of weaknesses
compared with "custom" logistics costs data - notably in terms of sectoral
definition - they nonetheless make it possible to conduct some preliminary
empirical analysis that can inform future measurement efforts. First, the paper
finds that there is little systematic evidence of a link between the size of the
logistics sector and economic outcomes, such as trade openness. Second, the
relationship between the size of the logistics sector and logistics performance
is non-monotonic. Third, the size of the logistics sector only increases in per
capita income up to a certain point, before the relationship turns negative.
These findings suggest that measures of sectoral size - such as logistics costs
relative to GDP - may be of limited use to researchers and policymakers
because they do not have an unambiguous interpretation in terms of
performance or economic outcomes. Fourth, however, direct indicators of
price and performance are more clearly related to economic outcomes, and
have a more straightforward relation with per capita income. The emphasis
going forward should therefore be on compiling data that capture logistics
performance most accurately, rather than sector size. Finally, the paper uses
input-output data to identify logistics-intensive sectors, and finds suggestive
evidence that improvements in logistics performance could lead to sectoral
reallocations in favor of relatively heavy industries in developing countries,
which is consistent with the goal of export diversification
Source: Ben Shepherd, https://openknowledge.worldbank.org/handle/10986/26724 This work is licensed under a Creative Commons Attribution 3.0 IGO License.