# **5 Conclusion**

As most exporters are also importers of intermediate goods and other inputs required in the production process, trade costs that constrain the capacity of firms to import are also likely to affect their export dynamics, especially in the context of rising GVCs. Using trade flows, Customs transactions and firmlevel data, several studies have so far provided evidence on how the reduction of import barriers can shape export performance and diversification patterns. This paper contributes to this literature by quantifying a new source of trade costs based on a novel measure of uncertainty in import clearance times and by exploring its impact on manufacturing firms’ export entry, exit and survival decisions. Using the PPML estimator on a sample of 48 developing countries over 2006-2014, we find that supply chain unreliability due to uncertainty in import clearance times impacts neither the entry nor the exit rate but translates into lower survival rates for entrants, reducing the number of firms that continue to serve the foreign market beyond their first year of entry. This effect grows larger over time with the accumulation of reputational costs to input-importing exporters and is mainly driven by South-North trade, possibly reflecting the time-sensitivity of importers in developed countries that tend to rely more heavily on lean supply-chain strategies. Results also reveal sectoral heterogeneity in the impact of import uncertainty, as well as the mediating role of sunk costs of entry in foreign markets that are found to attenuate the negative effect of uncertainty on export survival rates as firms delay exiting the export market. Most importantly, our measure of uncertainty displays a distinctive effect on export performance, as neither the mean nor the median time to import impacts survival.

Our findings suggest that developing countries seeking to promote the survival of newly-exporting firms in foreign markets should consider undertaking policies targeted at reducing the uncertainty these firms face when importing their production inputs. Predictability in border clearance times is key to a smooth running of the supply chain, allowing firms to deliver on time to time-sensitive foreign customers. Notwithstanding the contribution of firm-specific factors such as limited financial liquidity or willingness to pay bribes in influencing the duration of the import process, our results highlight the role of external factors related to trade facilitation and the investment climate that are outside firms’ control, hence calling for policy action. Specifically, given the lion’s share of Aid for Trade flows aimed at enhancing both hard and soft trade-related infrastructure and supporting border-related policies, our findings make the case for stepping up soft investments specifically designed to reduce supply chain unreliability due to unpredictable import clearance times.

First, efforts to address coordination failures among public and private actors involved in the movement of goods are key to lowering the dispersion of import times. For instance, incentivizing border control agencies, port operators and other transport and logistics stakeholders participating in the import process to adopt IT and electronically interconnect themselves, through a Single Electronic Window for instance, would facilitate collaboration and information sharing. This would in turn avoid duplication of requirements for importers, and should bring significant gains in reducing import time unreliability. An additional low-cost initiative that could successfully reduce import uncertainty is the use of IT systems for cargo tracking and tracing by port and road freight transport operators; and non-intrusive inspection mechanisms such as scanners by Customs. Second, effectively implementing the WTO Trade Facilitation 28