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The extensive and intensive margins of Spanish trade

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Author Info

  • Juan de Lucio
  • Ra�l Mínguez-Fuentes
  • Asier Minondo
  • Francisco Requena-Silvente

Abstract

Recent empirical research highlights that differences in trade flows across countries, products and years are governed by two margins: the intensive margin and the extensive margin. The analysis of the relative contribution of each margin is very important to determine which policies can be more efficient to foster trade at the aggregate, geographic, product or firm level. We use the whole universe of firm level transaction data to analyse the relative contribution of these margins to changes in Spanish trade flows during the 1997--2007 period. We first apply the methodology proposed by Bernard et al. (2009) to decompose trade variation over time into three components: net entry of firms, product-country switching and value growth by regular trading firms. The first two components correspond to the extensive margin and the last one refers to the intensive margin. We find that short-run changes in exports and imports are governed by firms’ intensive margin; however, in the long-run, both the extensive and the intensive margins are equally important to foster trade. We also examine the importance of the trade margins at the cross-sectional level for the year 2007. We find that large differences in the Spanish trade flows across countries and products, especially in the case of exports, are explained by the number of firms that participate in trade, which is consistent with the fact that the number of trading partners decline significantly with distance.

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File URL: http://hdl.handle.net/10.1080/02692171.2011.557051
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 25 (2011)
Issue (Month): 5 (January)
Pages: 615-631

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Handle: RePEc:taf:irapec:v:25:y:2011:i:5:p:615-631

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Cited by:
  1. Joachim Wagner, 2012. "The Microstructure of the Great Export Collapse in German Manufacturing Industries, 2008/2009," Working Paper Series in Economics 233, University of Lüneburg, Institute of Economics.
  2. Wagner, Joachim, 2012. "The granular nature of the great export collapse in German manufacturing industries, 2008/2009," Economics Discussion Papers 2012-50, Kiel Institute for the World Economy.
  3. Uribe-Etxeberria, Asier Minondo & Requena Silvente , Francisco, 2012. "The intensive and extensive margins of trade: decomposing exports growth differences across Spanish Regions," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 23, pages 53-76.
  4. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series 6229, The World Bank.
  5. Asier Minondo, . "Exporters of services in Spain," Working Papers 2011R04, Basque Institute of Competitiveness.

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