Estimating Transport and Insurance Costs of International Trade

Although the costs associated with the international transport and insurance of merchandise trade are an important determinant of the volume and geography of international trade, remarkably little (official) data exist. Combining the largest and most detailed cross-country sample of official national statistics on explicit CIF-FOB margins to date with estimates from an econometric gravity model, and using a novel approach to pool product codes across HS vintages, this paper presents the new OECD Database on International Transport and Insurance Costs (ITIC) that aims to fill this gap, and describes the methodology used in its construction. The database details the bilateral, product level international trade and insurance costs for more than 180 countries and partners, over 1 000 individual products, for the 1995-2014 time period, and provides an important new tool to further our understanding of global value chains, whilst also forming an important statistical input to the development of coherent and balanced bilateral trade statistics and to the TiVA database. In particular the database provides potential new insights on how distance, natural barriers such as mountain ranges, and inadequate infrastructure, shape regional (and global) value chains.