variables. While a one percent reduction in total time leads to .5 percent more trade, a one percent reduction in transit time leads to about a .7 percent decline in exports. Again only transit time is independently significant (results for other variables are not reported).<sup>8</sup> Our second strategy to deal with the potential endogeneity of the export time variables is to use a sample of landlocked countries and use the variables for the transit country(ies) as the instrument. This follows from Djankov, Freund and Pham (2010).9 Results are reported in Table 4. The first column reports OLS regression results for this sample. With the exception of documents, the coefficients are much larger for this sample than for the full sample (column (1) of Table 3). One explanation is that the endogeneity problem is greater here. For example, when landlocked country trade is small, customs and ports authorities (which must be located in neighboring countries) give them the lowest priority. To control for endogeneity, we next instrument each time variable with the corresponding variable in the transit country. The F-statistics of the first stage regressions (see Table 1A of the Appendix) indicate that none of the instruments is a weak instrument.<sup>10</sup> Second stage regression results, with and without foreign tariffs, are reported in levels in columns (2) and (3) and in logs in columns (4) and (5). For landlocked countries, only inland transit has a robust negative and significant effect on trade.<sup>11</sup> Moreover, the magnitude from column (2) is similar to the result using all countries and new trade (column (2), Table 3): a one day reduction in transit delays leads 8 Equation (1) has been estimated excluding trade in oils and minerals from the dependent variable to control for the surge in commodities exports that took place in some African countries during the 2007. In addition, to account for the presence of zero trade values across country pairs, Tobit and Poisson specifications were used. Results, available under request, confirm the fact that inland transit has a negative and significant impact on export values.

9 There are two differences with this study. First, authors use a difference gravity equation on similar exporters. In our case this strategy is not necessary since in our regressions we are considering only sub-Saharan Africa countries. Second, while they use the actual times in the transit country as instrument we use the time for the transit county’s trade in the transit country 10 Since our regression is perfectly identified we cannot test if the excluded instruments are not correlated with the error terms. Ïn Table A2 of the Appendix we replicate the regressions of Table 4 but this time including separate instruments for customs and ports. In this case the Sargan overidentification test supports the validity of the instruments.

11 This result does not only reflect the fact these countries are more isolated. Even though delays in inland transport are higher with respect to coastal countries (15 days versus 4 days on average), delays in documentation (24 days on average) and customs and ports (9 days on average) procedures are even higher for exporters in landlocked countries.

9