An Empirical Study on the Effects of Export Promotion on Korea-China-Japan Using Logistics Performance Index (LPI)

Abstract

Purpose – “Trade Facilitation” aims the easier flow of trade across borders, driven not only by effective customs administration, the efficiency of appropriate authorities, but also by telecommunications, the quality of infrastructures and competent logistics. Facilitating trade will help lower trade development costs as well as improve economic development and enhance economic benefits for emerging economies at a time when imports and exports are sent in and out across borders several times in the form of intermediate and final products. Not only that, globalization is being accelerated, which in turn increases competitiveness and this makes logistics one of the key factors when it comes to international trade. Highly efficient logistics services promote product movement, ensure product safety and delivery speed, and reduce trade costs between countries. The purpose of this study is, by using the LPI indices based on gravity model estimates, to analyze the impact of each LPI component on trade with the 20 biggest exporting countries of Northeast Asian countries — Korea, Japan, and China — which account for 19.05% of global exports.

Design/methodology – Also, this study statistically analyzes the impact of trade on Northeast Asian countries’ top 20 exporting countries, using the LPI indices relevant to Trade Facilitation based on the gravity model estimates.

Findings – As a result, it was turned out that the distance, GDP, and the LPI components have relevant impact on the trade exports of all three countries but demonstrated little relation to the demographic perspective.

Originality/value – The study also found we can increase the trade volume by improving three countries’ trade partners’ LPI indices since Korea, Japan, and China share most of their 20 biggest trade partners.