Gross domestic product and logistics performance index drive the world trade: A study based on all continents

Abstract

The purpose of this study was to examine the impact of Gross Domestic Product (GDP) and Logistics Performance Index (LPI) on international trade of nations across each continent and worldwide. Secondary data collected on 142 countries—37 Asian, 41 European, 41 African, 3 Oceania, 14 Middle East, 11 North American and 9 South American–were analysed across the years 2007, 2010, 2012, 2014, 2016, and 2018. Panel regression technique was applied and the random effect (RE) model was chosen based on the results of the Hausman tests and Breusch–Pagan Lagrange Multiplier test. The findings revealed that the LPI has a positive relationship with net exports globally and specifically within the continents of Asia, Europe, and Oceania. Moreover, while the GDP appears to have a significant negative impact on net exports, specifically within Asia, in contrast, countries in Oceania and the Middle East present a positive relationship. Also on the African continent, GDP has a significant negative impact on the net exports. Findings provide a holistic picture of the impact of LPI & GDP on net exports, which will assist governments in the formulation and revision of its strategies and policies to expedite the growth of exports and in turn, the economy. This study was the first of its kind to explore the impact of GDP and LPI on international trade of nations across worldwide.