Impact of High Trade Costs and Uncertain Trade Times on Exports of Final and Intermediate Goods in Five Central Asian Countries

The failure of newly independent Central Asian countries to diversify exports after the Soviet Union’s collapse is attributed to high trade costs, either because these countries are landlocked or due to border delays and regulatory obstacles. This paper estimates the impact of the high costs of exporting in Central Asia using a structural gravity model with trade cost variables from the trade facilitation indicators of the Corridor Performance Measurement and Monitoring dataset. The results demonstrate that uncertainty in the time to export has a strong negative impact on exports of goods in five Central Asian countries. Moreover, time-sensitive, perishable agricultural products are confirmed to be strongly impacted by uncertainty in export time, while textile and apparel commodities are highly sensitive, relative to other commodities, to high costs to export. The findings suggest that policies aimed not only at reducing time and costs but also at creating an enabling and predictable trading environment could significantly boost cross-border trade, promote export diversification, and foster economic growth in the region.