The propellants of the Logistics Performance Index: an empirical panel investigation of the European region

Due to globalization, logistics has been constituting the main and capillary vessels of foreign trade. In today's global supply chains, better logistics systems allow for and facilitate the efficient flow of resources, goods and services. Since logistics plays an important role on countries’ economic growth, development and competitiveness, measuring the logistics capability of a country is critical. In this study, we collected data for 32 countries in the European region from various sources covering the period 2010 through 2018 and estimated several static panel data models to evaluate their logistics performance and to understand the factors that propel their LPIs. The results indicate that GDP per capita, the percentage of commercial service imports, and the liner shipping connectivity index have significant effects on the LPI at country level, surpassing other factors. Even though supported at only a significance level of 0.10, the most striking evidence is the negative relationship between the LPI and the percentage of commercial transport service imports, which has not been extensively investigated in the related literature. The strength of this study lies in adopting a panel-data approach with the inclusion of a variety of factors to explain the variance in the LPI.