Determinants of Trade Costs: An Application of Gravity Model for ECOWAS Countries

Abstract

The objective of this research is to analyze and evaluate the main trade felicitation factors that affect trade cost, total trade cost and manufactured trade cost in ECOWAS countries. To cope with these objectives, the methodology we adopt an econometric approach of gravity model. The data cover the ECOWAS with their main trade partners from 2010 to 2014. We use a methodology strategy based on gravity model and estimated by PPML regression. The main result is that total trade cost and manufactured trade cost are both influenced by traditional gravity model variables and Doing Business (DB) indicators. Most importantly, trade cost in ECOWAS countries are more impacted by customs environment .