Doha-ha-ha

Now that the latest Doha-round negotiations went up in flames, there has been a lot of finger-pointing about who derailed it--and concern about the detrimental effects of this failure.

Not to worry. As Dani Rodrik explains in a recent blog, the loss is not that big.

Instead, trade negotiators can turn their attention to reducing bureaucracy and delays in trade. Each additional day that a product is delayed prior to being shipped reduces trade by more than one percent. Put differently, each day is equivalent to a country distancing itself from its trade partners by about 70 km on average. These are the findings of a recent study on trade logistics, based on evidence from 98 countries [Djankov, Freund and Pham "Trading on Time," Review of Economics and Statistics (forthcoming)]. Delays have an even greater impact on exports of time-sensitive goods, such as perishable agricultural products. For these, an extra day of delay reduces trade volumes by 3.5 percent.

In Sub-Saharan Africa, it currently takes 48 days on average to get a container from the factory gate loaded on to a ship. These data come from the Doing Business project. Reducing export times by 10 days is likely to have a bigger impact on exports (expanding them by about 10 percent) than any feasible liberalization in Europe or North America, according to a paper by David Hummels.

These results are supported in several other studies. For example, a recent IMF study, also using Doing Business data, finds that each extra signature exporters have to collect before a shipment can take place reduces export volumes by 4.2 percent. Excessive bureaucracy in trade has an even larger impact on exports of differentiated products—each signature reduces exports of differentiated products by 8.4 percent.

This idea is also developed in a recent Wall Street Journal op-ed - Greasing the World Economy without Doha.