An Assessment of Trade Costs in OIC Countries
Date : 27 February 2014

Since the initiation of the General Agreement on Trade and Tariffs in 1947, a dramatic fall in tariffs, quotas and other non-tariff barriers has been observed in the world trading system. Particularly in manufacturing goods, significant reductions were observed in tariff rates. Substantial improvements in transport and logistics over the years have also contributed to the fall in trade costs around the world. However, international trade remained more costly than domestic trade. This is not only due to costs of transporting goods to far distances, but also at-the-border and behind-the-border costs that can be reduced by appropriate policies. This fact accordingly shifted the attention from reducing policy barriers to promoting trade facilitation.

OIC countries have equally benefited from this transformation, albeit at varying levels depending on their transport infrastructure, composition of export goods and their distance to export markets. The current 57 OIC countries are dispersed over a large geographical region and at different levels of economic development. The mixed nature of the group of the OIC countries reflects high levels of heterogeneity and divergence in the economic structure and performance of these countries. This also reflects the great potential for trade between the member countries. Partial utilization of this potential has already produced visible benefits and the share of intra-OIC trade continuously increased over the last decade, hitting its highest level in 2012 and accounting for 18.2% of total OIC trade.

Enhancing the intra-OIC trade is one of the key targets of the OIC Ten Year Program of Action as well as new COMCEC strategy. Despite the great importance given to the issue, there is no serious technical document evaluating the progress achieved and prospects for further development. In this respect, this study aims to conduct an in-depth analysis on trade costs as an initial step towards more comprehensive technical studies. In this respect, the study will analyze the trade costs in OIC countries in descriptive manner and also estimate the decomposition of trade costs in OIC countries through empirical analysis. Thereby, it aims to contribute to identification of the major barriers for the expansion of trade within the OIC region.

Online Electronic Version

  • An Assessment of Trade Costs in OIC Countries (English)