Digitizing Trade Procedures and Trade Gains in the OIC Countries

Abstract

The objective of the current study is to examine the impact of digital trade facilitation on the bilateral trade flows of OIC countries. The existing literature has suggested that the Oic countries are yet to achieve their full potential in regard to digitization of trade procedures. There mean values of digital trade facilitation are below as compared to the world average. Hence to empirically analyze the impact of full implementation of digital trade facilitation measures on OIC countries we have applied structured gravity model of trade using Poisson pseudo maximum likelihood estimator. The analysis is based on the UN Global Survey on Digital and Sustainable Trade Facilitation survey which is conducted biennially since 2017. The findings show a considerable impact of digitization on the bilateral trade flows of the OIC countries. The analysis is not only limited to the aggregate trade. In addition to analyzing aggregate trade, we examined trade in the manufacturing, mining and energy, and agriculture sectors. The proposed research model follows the latest developments in gravity trade model and includes both international and intra-national trade flows for empirical analysis. It is evident from the findings that paperless trade and cross boarder digitization significantly improve the bilateral trade flows in the OIC bloc. The implementation of digital trade facilitation measures results in an increased aggregate trade, including both manufactured and agricultural goods. The countries that heavily rely on the exports of mining products could benefit by the implementation of digital TF measures and diversify their trade portfolio. The research offers valuable insights for policy makers and reinforces the importance of implementation of digitization into trade procedures.