The Impact of Logistics Performance on the Success of Trade Agreements
Document Type Dissertation
The purpose of this capstone project is to determine whether or not it is possible to predict the success and effectiveness of new trade agreements by looking at fundamental factors associated with efficient supply chain management. Typically, free trade agreements are analyzed using economic factors such as Gross Domestic Product or labor gains and losses. When this is done to determine whether or not a trade agreement is successful, it is usually backwards looking and too late for a country to opt out without economic repercussions. The aim of this study is to determine whether it is possible to predict the potential success of a free trade agreement. Furthermore, rather than using economic indicators to make predictions, I have decided to use supply chain, specifically logistics, metrics to conduct this study. Using logistics metrics is a better representation than economics, not only because the economics metrics mentioned are lagging indicators, but also because without sound logistics and the capability to move goods from point A to B, a trade agreement would fail. This study is comprised of two different quantitative analyses. First, I look at the Logistics Performance Index (LPI) compared to Net Trade to see if a relationship existed. The next step was to determine what factors drive LPI growth and should be a country’s focus for improving. The trade agreement focused on in this study was the Tripartite Free Trade Agreement encompassing 27 countries in Africa.