Effect Size of Logistics: Evidence from Selected Countries

Abstract

Efficiency of cross-border goods' movement and resource use is key for countries' economic growth. This study aimed to estimate the effect size of transportation infrastructure and logistics performance on selected countries' development, based on the infrastructure of services approach. A partial least square (PLS) and structural equation modeling (SEM) analysis for 74 countries for 2012–2018 revealed that transportation infrastructure and logistics performance were statistically significant (at the 1% level) for economic development, despite small and medium effect size. Transportation had a significantly positive and large effect on logistics performance (at the 1% level). Mediation analysis results also showed evidence of the significantly large effect size (at the 1% level) of logistics performance. The study concludes that logistics performance is a strong contributor—directly and indirectly—in the development of countries where transportation alone may not be enough. Hence, countries should prioritize logistics development strategies to harness global production networks, improve policies and practices, and enhance their standards of living.