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Trade Facilitation and the Extensive Margin

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  • Persson, Maria

    ()
    (Research Institute of Industrial Economics (IFN))

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 paper 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 per cent, the number of exported differentiated and homogeneous products would rise by 0.7 and 0.4 per cent 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 64 and 29 per cent respectively.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 828.

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Length: 23 pages
Date of creation: 13 Apr 2010
Date of revision:
Publication status: Forthcoming as Persson, Maria, 'Trade Facilitation and the Extensive Margin' in Journal of International Trade and Economic Development, 2011.
Handle: RePEc:hhs:iuiwop:0828

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Keywords: Trade Facilitation; Extensive Margin; Export Diversification; Differentiated Products; Homogeneous Products; European Union; Developing Countries;

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References

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Citations

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Cited by:
  1. 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.
  2. Bourdet, Yves & Persson, Maria, 2011. "Reaping the Benefits of Deeper Euro-Med Integration Through Trade Facilitation," Working Paper Series 881, Research Institute of Industrial Economics.
  3. J.M.C. Santos Silva & Silvana Tenreyro & Kehai Wei, 2012. "Estimating the Extensive Margin of Trade," Economics Discussion Papers 721, University of Essex, Department of Economics.
  4. Cletus C. Coughlin, 2012. "Extensive and intensive trade margins: a state-by-state view," Working Papers 2012-002, Federal Reserve Bank of St. Louis.
  5. 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.
  6. Ferguson, Shon & Forslid, Rikard, 2014. "Sizing Up the Impact of Embassies on Exports," Working Paper Series 1012, Research Institute of Industrial Economics.
  7. Saslavsky, Daniel & Shepherd, Ben, 2012. "Facilitating international production networks : the role of trade logistics," Policy Research Working Paper Series 6224, The World Bank.
  8. Nguyen, Cuong, 2013. "Poverty, Inequality and Trade Facilitation in Low and Middle Income Countries," MPRA Paper 50312, University Library of Munich, Germany.

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