Trade facilitation reduces trade costs and eases the movement of goods and services. Studies have shown that trade flows increased by improving the trade facilitation process and reducing trade costs. The study aims to estimate the effects of trade facilitation enhancement on trade costs in 111 developed and developing countries over the 2008 to 2014 period using the Poisson-Pseudo Maximum Likelihood (PPML) estimator. The findings show that trade facilitation components such as border administration, business environment and transport and communication infrastructure reduce trade costs. This trade facilitation should have helped alleviate the effects of the financial recession and eased world trade recovery. On the other hand, the study finds that additional market access increases trade costs. The most important finding is that the effectiveness of trade facilitation is higher when more countries engage in trade and when those countries are together participating in trade facilitation.

This paper examines the link between trade facilitation and extensive margin for 111 countries over the period of 2008 to 2014. The study employs a panel pseudo-maximum likelihood (PPML) method to estimate the model. We measure trade facilitation using more comprehensive Enabling Trade Index (ETI); market access, border administration, transport and communication infrastructure, and business environment. The novelty in using ETI is that the index takes into account the effects of factors, policies, and services by facilitating the free flow of goods over borders to the destination. The paper has four major findings. Our results highlight that better trade facilitation leads the countries to export; import became more diversified with a wider range of products. Second, improvement in the business environment and transport and communication infrastructure in trade facilitation yield the highest return in terms of increasing the number of exported products. Third, border administration as the second most important factor in affecting extensive margin. Finally, despite economic integration, there is a considerably stronger effect on the side of exporter's trade facilitation, which shows large unexploited gains, to be reaped on the side of exporter countries trade facilitation.