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Trade Facilitation and the Extensive and Intensive Margins of Trade

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  • Persson, Maria

    ()
    (Department of Economics, Lund University)

Abstract

Exploring the link between trade facilitation and the extensive and intensive margins of trade, the paper has two aims. The first and main objective is to investigate whether the extensive margin of trade in homogeneous and differentiated goods is affected in the same way by cross-border trade transaction costs. The second objective is to compare the implications for the extensive and intensive margins to ascertain the margin at which these transaction costs matter the most, again controlling for the type of goods being traded. Very detailed mirror data on imports to EU countries from developing countries in 2005 is utilized to decompose these countries’ exports into its extensive and intensive margins. Using the number of days needed to export a good as a proxy for trade transaction costs, econometric evidence is found that there is a significant and negative association between export transaction costs and the extensive margin for differentiated goods: developing countries with high transaction costs will export significantly fewer differentiated goods. However, no such negative effect on the extensive margin is found for homogeneous goods. Comparing the two margins’ effects, evidence is found that, for differentiated goods, the extensive margin is more negatively affected by export transaction costs than the intensive margin. Results also indicate that to the extent that there is an overall negative trade effect on homogeneous goods from export transaction costs, this negative effect stems from effects on the intensive margin.

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File URL: http://project.nek.lu.se/publications/workpap/Papers/WP08_13.pdf
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Bibliographic Info

Paper provided by Lund University, Department of Economics in its series Working Papers with number 2008:13.

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Length: 32 pages
Date of creation: 15 Sep 2008
Date of revision:
Publication status: Forthcoming as Persson, Maria, 'Trade Facilitation and the Extensive Margin' in Journal of International Trade and Economic Development.
Handle: RePEc:hhs:lunewp:2008_013

Contact details of provider:
Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/en
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Keywords: Trade Facilitation; Extensive and Intensive Margins of Trade; Export Diversification; Homogeneous and Differentiated Goods;

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Citations

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Cited by:
  1. Christodoulopoulou, Styliani, 2010. "THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade," MPRA Paper 29169, University Library of Munich, Germany.
  2. Alessandro Nicita & Valentina Rollo, 2013. "Tariff Preferences As A Determinant For Exports From Sub-Saharan Africa," UNCTAD Blue Series Papers 60, United Nations Conference on Trade and Development.
  3. Jayant Menon, 2013. "Can FTAs Support the Growth or Spread of International Production Networks in Asia?," Departmental Working Papers 2013-06, The Australian National University, Arndt-Corden Department of Economics.
  4. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2013. "Determinants of export survival in the Lao PDR," Policy Research Working Paper Series 6301, The World Bank.

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