THE IMPACT OF TRADE COSTS IN MENA COUNTRIES: THE ROLE OF DIRECT AND INDIRECT MARITIME TRANSPORT COST

This paper empirically investigates the impact of trade costs, by focusing on the effect of maritime transport costs in MENA countries (Middle-East and North Africa). For this purposes we use an augmented gravity models over the period 2000-2009. Besides political costs, such as tariff and non-tariff barriers, we estimate the effect of direct costs of transport by integrating a variable of bilateral freight rates. The impact of indirect costs is also tested by five main covariates: the number of transhipment, the size and the age of the vessels, the level of competition and logistics performance. The estimation is performed using the Hausman-Taylor and the Generalized Method of Moments (GMM) estimators. The main results show that the MENA countries generally have higher trade costs. Furthermore, the negative impact of these costs on international trade is more important for MENA members than for other countries, especially for the freight rates and for the number of transhipments. These results suggest that the competitiveness of these countries are particularly affected by direct and indirect costs of transport. Appropriate policies must be implemented to reduce these cost such as the modernization of ports, improving the quality of state services, increased competition, etc.