The Effect of Infrastructure and Logistics Performance on Economic Performance: The Mediation Role of International Trade

AuthorAimin Deng,Todine Y. Nadiedjoa,Alassane D. Yeo
DOI10.1177/0015732520947676
Publication Date01 Nov 2020
SubjectArticles
The Effect of
Infrastructure and
Logistics Performance
on Economic
Performance: The
Mediation Role of
International Trade
Alassane D. Yeo1, Aimin Deng1 and
Todine Y. Nadiedjoa2
Abstract
This paper evaluates the effect of infrastructure and logistics performance on
economic performance. In addition, the mediating role of international trade on
the relationship between infrastructure and economic performance, and logistics
performance and economic performance, respectively. Generalized Structured
Component Analysis (GSCA) was proposed as a Component-Based Approach to
Structural Equation Modeling (SEM) to test several hypotheses regarding the inter-
action of the latent variable. Furthermore, the mediation analysis using regression
was performed. Based on data from middle income selected countries, the hypoth-
esis about the mediation role of international trade was partially supported. Our
results also suggest that infrastructure and logistics performance improvements
may enhance middle-income countries sustainable growth with increasing interna-
tional trade volume.
JEL Codes: F43, L90, P33
Article
1 Institute of Transportation and Logistics, School of Economics and Trade, Hunan University, Changsha,
China.
2 School of Economics and Trade, Hunan University, Changsha, China.
Corresponding author:
Alassane Dounignatieme Yeo, Institute of Transportation and Logistics, School of Economics and Trade,
Hunan University, Changsha 410082, China.
E-mail: yad.elisec@gmail.com
Foreign Trade Review
55(4) 450–465, 2020
© 2020 Indian Institute of
Foreign Trade
Reprints and permissions:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/0015732520947676
journals.sagepub.com/home/ftr
Yeo A. et al. 451
Keywords
Infrastructure, logistics performance, international trade, economic growth, inter-
national trade, GSCA, SEM, mediation analysis
Introduction
The assessment of the impact of infrastructure on economic growth in developing
countries has been the focus of academic discussion over many years. Accord-
ing to Srinivasu and Rao (2013) infrastructure, is essentially the foundation on
which economic growth is based. Infrastructure is the hub of the global economy
and a necessary component of all economic production. The role of infrastructure
in economic growth is critical to the prosperity of the nation and the health and
well-being of its people (Szreter, 1997). The quality of infrastructure has an im-
pact on a country’s economy, affecting business productivity, GDP, employment,
national and international trade and international competitiveness. Roads, water
systems, mass transportation, airports and utilities are all examples of infrastruc-
ture. Also, it covers those supporting services that help the growth of directly
productive activities like agriculture and industry (Sakai, 2006; Xueliang, 2008).
Recently, logistics performance and its impact on international trade and
economic performance has entered the discussion and has offered a large scope of
study in this area. According to Gani (2017), international trade is based on logi-
stics services. Good logistics reduce the cost of trade, knowing that supply chains
are as good as their weakest link. The logistics industry has begun to focus on
eliminating some of the inefficiencies associated with traditional shipping and
delivery business models. Today, all industries depend on the logistics sector, and
the logistics dimensions of transport and communication have a considerable impact
on economic growth in OECD countries (Sezer & Abasiz, 2017). Therefore, new
technologies are targeting a variety of logistics services, including automated
scheduling, consolidation of deliveries from multiple shippers, on-demand trucking
and data analysis by carriers. These new techniques have brought innovation in
trade facilitation, helping lower costs related to the movement of goods and services,
and increase the volume of trade between nations (Miroudot et al., 2009).
Most countries are implementing reforms or investing in infrastructure as well
as in the logistics sector to facilitate transport and trade and to promote modern
and efficient services. However, despite these efforts, relevant studies reveal a
large difference in the development of logistics between countries. High-income
countries have a logistics performance score that is 48 per cent higher, on average
than in low-income countries (Martí et al., 2014). For developing countries,
improving logistics depends on their infrastructure, customs procedures, level of
logistical skills and regulations. The logistics sector is constantly improving all
over the world, and the level of competition in this area is also increasing. As a
result, companies are continually developing in terms of costs, human resources,
the quality of activities and management processes, efficiency and technology
(Batarlienė et al., 2017). Recently, logistics has emerged as a dynamic sector that
is developing rapidly on a global scale and therefore has a very prominent role in
international trade and economic success.

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