In its 2009 edition<sup>23</sup> , the Doing Business database reports the corresponding time for each stage of the export process: document preparation, customs clearance, ports and terminal handling, and inland transportation and handling. In Table 8, we use the interactions between time sensitivity with the time recorded for each stage to assess to what extent different components matter for export performance. The results need to be interpreted with caution as we use information on the last year of our sample. We first use the total time for export reported for 2008 to re-estimate (4) and (5). As reported in Column 1 and 7, the estimated coefficients on time interaction are negative and statistically significant but the magnitude is smaller than baseline results. This is due, at least in part, to the fact that we use the information on the last year. Columns 2 to 5 and 8 to 11 present the estimates when introducing individual component of export process one at a time. Estimated coefficients on all time interactions are negative and statistically significant for both equations (4) and (5). Notably, when using time for customs clearance the magnitude is the largest among all. Column 6 and 12 report the estimates when all time interactions are considered together. The coefficients on time interactions using time for customs clearance and time for inland transportation remain large and significant. The results do not imply that documents preparation and port handling do not matter for export performance. Rather, they indicate that in countries with longer delays in these stages the export performance of firms from more time-sensitive industries is not disproportionately worse. By contrast, firms from more time-sensitive industries are less likely to export and have lower export intensities when located in countries with longer delays in customs clearance and in inland transportation.

# **VI. Conclusion**

We are interested in the importance of the time costs of trade in explaining firm-level export performance. For that purpose, we construct a unique data set by combining the information on export time with data on firm export performance in 64 countries. Deviating from existing literature on trade costs, we use a Difference-in-Difference approach to assess the compositional effects. We find that firms of time-sensitive industries are less likely to export in countries where there is a longer time needed to export. Firms that do export tend to have lower export intensities in such countries. These findings confirm that costs associated with time delays depress exports through both extensive and intensive margins. Moreover, they suggest that time is a significant determinant of comparative advantage in the trade of time-sensitive products.

Take, for instance, electronics, which are the most sensitive to time and textiles, which have the median value of time sensitivity. The estimates suggest that the differences in export probabilities between electronics and textiles in Malaysia (which can transport goods from factory to ship in 18 days) are 15 percentage points higher than the differences in export probabilities between the same industries in Cambodia (which has an average export time of 43 days). Furthermore, the differences in export intensities between the same industries in Malaysia are 5 percentage points higher than in Cambodia as well.

In developing countries, much work is still needed to improve their inefficient international trade systems. The inefficiency can stem from poor trade-related infrastructure,

> 23 2009 update of Doing Business report information on 2008.

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