Trade facilitation in global value chains: Assessing the role of maritime connectivity and trading across borders

This paper examines the impact of trade facilitation factors on trade flows, with a particular focus on Global Value Chains (GVCs) in the agricultural and manufacturing sectors. Using the structural gravity model of international and intra-national trade and data covering the period from 2006 to 2018, we analyze the influence of maritime connectivity and cross-border trade-facilitation factors on trade in final and intermediate goods. Our findings indicate that both factors play pivotal roles in both agricultural and manufacturing subsectors' trade. First, maritime connectivity has a heterogeneous effect on trade across sectors. It positively affects imports of final goods in textile products, basic metals, motor vehicles, and other machinery and equipment, as well as imports of intermediate inputs for fishing, rubber, machinery and equipment, and motor vehicles. Second, cross-border trade-facilitation factors have a significant influence mostly on trade of final goods in the manufacturing sector and agricultural intermediates showing also differential effects across subsectoral categories. This reveals that policies that improve maritime connectivity and reduce paperwork, time delays and transport costs promote trade integration within GVCs in the analyzed sectors. These findings underscore the sector-specific implications of trade facilitation measures and highlight the need for targeted policy interventions.