Exports and International Logistics*

Better international logistics raise a developing country's exports, but the magnitude of the effect depends on the country's size. We apply a gravity model that accounts for firm heterogeneity and multilateral resistance to an international logistics index. A one standard deviation improvement in logistics is equivalent to a 14% reduction in distance. An average‐sized developing country would raise exports by approximately 36%. Most of the countries are much smaller than average, so the typical effect is 8%. This difference is chiefly due to the dampening effect of multilateral resistance, which is more important for small countries.