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Trade facilitation and the extensive margin

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  • Maria Persson

Abstract

The literature on trade facilitation has mostly focused on implications for trade volumes. However, recent theoretical contributions have emphasized that trade costs -- such as transaction costs related to cross-border trade procedures -- affect both the traded volumes of ‘old’ goods (the intensive margin ) and the range of traded goods (the extensive margin ). This article therefore tests whether trade facilitation affects the extensive margin by counting the number of 8-digit products that are exported from developing to EU countries, and using this as the dependent variable in an estimation. Moreover, it also tests whether the extensive margins in differentiated and homogeneous goods are affected in the same way by transaction costs. Estimation results suggest that if export transaction costs -- proxied by the number of days needed to export a good -- declined by 1%, the number of exported differentiated and homogeneous products would rise by 0.6% and 0.3%, respectively. Policy simulations further illustrate that if all countries were as efficient at the border as the most efficient country at the same level of development, the number of exported differentiated and homogeneous products would increase by 62% and 26%, respectively.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 22 (2013)
Issue (Month): 5 (August)
Pages: 658-693

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Handle: RePEc:taf:jitecd:v:22:y:2013:i:5:p:658-693

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Citations

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Cited by:
  1. Bourdet, Yves & Persson, Maria, 2011. "Reaping the Benefits of Deeper Euro-Med Integration Through Trade Facilitation," Working Papers 2011:15, Lund University, Department of Economics.
  2. Nguyen, Cuong, 2013. "Poverty, Inequality and Trade Facilitation in Low and Middle Income Countries," MPRA Paper 50312, University Library of Munich, Germany.
  3. Santos Silva, J.M.C. & Tenreyro, Silvana & Wei, Kehai, 2014. "Estimating the extensive margin of trade," Journal of International Economics, Elsevier, vol. 93(1), pages 67-75.
  4. Fer, Shon & Forslid, Rikard, 2014. "Sizing Up the Impact of Embassies on Exports," Working Paper Series 1012, Research Institute of Industrial Economics.
  5. Saslavsky, Daniel & Shepherd, Ben, 2012. "Facilitating international production networks : the role of trade logistics," Policy Research Working Paper Series 6224, The World Bank.
  6. Kichun Kang, 2012. "What Matters For The Extensive And Intensive Margins Of International Trade? Evidence From Korean Exports," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 57(03), pages 1250018-1-1.
  7. Persson, Maria, 2011. "From trade preferences to trade facilitation: Taking stock of the issues," Economics Discussion Papers 2011-23, Kiel Institute for the World Economy.
  8. Cletus C. Coughlin, 2012. "Extensive and intensive trade margins: a state-by-state view," Working Papers 2012-002, Federal Reserve Bank of St. Louis.

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