Advanced Search
MyIDEAS: Login to save this paper or follow this series

THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade

Contents:

Author Info

  • Christodoulopoulou, Styliani
Registered author(s):

    Abstract

    This paper examines empirically the effects of the WTO and RTA membership on the extensive and the intensive margins of trade. Using disaggregated data for a sample of 177 countries, the main findings of this paper are that WTO membership tends to increase the number of products traded between members (extensive margin), and tends to increase the average sales per product line (intensive margin). I further detect substantial heterogeneity when I examine these effects for various subsamples of the data (e.g. by the degree of product differentiation or the level of development of a country). This demonstrates that many of the aggregate effects estimated in the existing literature (e.g. Rose 2004) hide a substantial amount of variation in the WTO's effect on trade. Finally, accounting for multilateral resistance as in Anderson and van Wincoop (2003), I find that the WTO effect becomes insignificant, while the RTA membership boosts trade between members and between members and outsiders at least in the aggregate level.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://mpra.ub.uni-muenchen.de/29169/
    File Function: original version
    Download Restriction: no

    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29169.

    as in new window
    Length:
    Date of creation: 22 Jul 2010
    Date of revision:
    Handle: RePEc:pra:mprapa:29169

    Contact details of provider:
    Postal: Schackstr. 4, D-80539 Munich, Germany
    Phone: +49-(0)89-2180-2219
    Fax: +49-(0)89-2180-3900
    Web page: http://mpra.ub.uni-muenchen.de
    More information through EDIRC

    Related research

    Keywords: WTO; Regional Trade Agreements; Extensive margin; Intensive Margin; Poisson Regression;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Joao Santos Silva & Silvana Tenreyro, 2005. "The Log of Gravity," CEP Discussion Papers, Centre for Economic Performance, LSE dp0701, Centre for Economic Performance, LSE.
    2. David Weinstein & Christian Broda, 2004. "Globalization and the Gains from Variety," 2004 Meeting Papers, Society for Economic Dynamics 530, Society for Economic Dynamics.
    3. Felbermayr, Gabriel, 2006. "Exploring the Intensive and Extensive Margins of World Trade," Munich Reprints in Economics, University of Munich, Department of Economics 20646, University of Munich, Department of Economics.
    4. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, American Economic Association, vol. 89(1), pages 215-248, March.
    5. John Romalis, 2007. "NAFTA's and CUSFTA's Impact on International Trade," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 416-435, August.
    6. Andersson, Martin, 2007. "Entry costs and adjustments on the extensive margin - an analysis of how familiarity breeds exports," Working Paper Series in Economics and Institutions of Innovation, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies 81, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    7. Antoine Berthou & Lionel Fontagné, 2008. "The Euro and the Intensive and Extensive Margins of Trade: Evidence from French Firm Level Data," Working Papers 2008-06, CEPII research center.
    8. Albornoz-Crespo, Facundo & Calvo Pardo, Hector F. & Corcos, Gregory & Ornelas, Emanuel, 2010. "Sequential Exporting," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8103, C.E.P.R. Discussion Papers.
    9. Alberto Amurgo Pacheco, 2006. "Preferential Trade Liberalization and the Range of Exported Products: The Case of the Euro-Mediterranean FTA," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 18-2006, Economics Section, The Graduate Institute of International Studies.
    10. Miriam Manchin, 2004. "Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries," Tinbergen Institute Discussion Papers 04-132/2, Tinbergen Institute.
    11. Pao-Li Chang & Myoung-Jae Lee, 2007. "The WTO Trade Effect," Working Papers, Singapore Management University, School of Economics 06-2007, Singapore Management University, School of Economics.
    12. Richard Baldwin Virginia Di Nino, 2006. "Euros and zeros: The common currency effect on trade in new goods," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 21-2006, Economics Section, The Graduate Institute of International Studies, revised 31 Oct 2006.
    13. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, American Economic Association, vol. 98(4), pages 1707-21, September.
    14. Arvind Panagariya, 1999. "The Regionalism Debate: An Overview," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 22(4), pages 477-512, 06.
    15. Richard Frensch, 2010. "Trade Liberalization and Import Margins," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 46(3), pages 4-22, May.
    16. Harry Flam & Hakan Nordström, 2006. "Euro Effects on the Intensive and Extensive Margins of Trade," CESifo Working Paper Series 1881, CESifo Group Munich.
    17. Elisa Gamberoni, 2007. "Do unilateral trade preferences help export diversification? An investigation of the impact of European unilateral trade preferences on the extensive and intensive margin of trade," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 17-2007, Economics Section, The Graduate Institute of International Studies.
    18. Russell Hillberry & Christine McDaniel, 2003. "A Decomposition of North American Trade Growth since NAFTA," International Trade, EconWPA 0303003, EconWPA.
    19. Timothy J. Kehoe & Kim J. Ruhl, 2006. "How Important is the New Goods Margin in International Trade?," 2006 Meeting Papers, Society for Economic Dynamics 733, Society for Economic Dynamics.
    20. Mary Amiti & Caroline Freund, 2010. "The Anatomy of China's Export Growth," NBER Chapters, in: China's Growing Role in World Trade, pages 35-56 National Bureau of Economic Research, Inc.
    21. James E. Rauch, 1996. "Networks versus Markets in International Trade," NBER Working Papers 5617, National Bureau of Economic Research, Inc.
    22. Persson, Maria, 2008. "Trade Facilitation and the Extensive and Intensive Margins of Trade," Working Papers, Lund University, Department of Economics 2008:13, Lund University, Department of Economics.
    23. By Michael Funke & Ralf Ruhwedel, 2001. "Product Variety and Economic Growth: Empirical Evidence for the OECD Countries," IMF Staff Papers, Palgrave Macmillan, vol. 48(2), pages 1.
    24. Bernard, Andrew & Jensen, J Bradford & Redding, Stephen J & Schott, Peter, 2007. "Firms in International Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6277, C.E.P.R. Discussion Papers.
    25. Debaere, Peter & Mostashari, Shalah, 2005. "Do Tariffs Matter for the Extensive Margin of International Trade? An Empirical Analysis," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5260, C.E.P.R. Discussion Papers.
    26. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics, Boston College Department of Economics 485, Boston College Department of Economics.
    27. Amurgo-Pacheco, Alberto & Pierola, Martha Denisse, 2008. "Patterns of export diversification in developing countries : intensive and extensive margins," Policy Research Working Paper Series 4473, The World Bank.
    28. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, American Economic Association, vol. 94(1), pages 98-114, March.
    29. Gabriel J. Felbermayr & Wilhelm Kohler, 2007. "Does WTO Membership Make a Difference at the Extensive Margin of World Trade?," CESifo Working Paper Series 1898, CESifo Group Munich.
    30. Martinez-Zarzoso Inma & Márquez-Ramos Laura, 2008. "The Effect of Trade Facilitation on Sectoral Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 8(1), pages 1-46, September.
    31. Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2007. "The single currency’s effects on Eurozone sectoral trade: winners and losers?," ISAE Working Papers, ISTAT - Italian National Institute of Statistics - (Rome, ITALY) 88, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    32. Paul M. Romer, 1993. "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions," NBER Working Papers 4452, National Bureau of Economic Research, Inc.
    33. Giovanni Peri & Francisco Requena, 2009. "The Trade Creation Effect of Immigrants: Testing the Theory on the Remarkable case of Spain," Development Working Papers, Centro Studi Luca d\'Agliano, University of Milano 275, Centro Studi Luca d\'Agliano, University of Milano.
    34. Kyle Bagwell & Robert W. Staiger, 1997. "Reciprocity, Non-discrimination and Preferential Agreements in the Multilateral Trading System," NBER Working Papers 5932, National Bureau of Economic Research, Inc.
    35. Xuepeng Liu, 2009. "GATT/WTO Promotes Trade Strongly: Sample Selection and Model Specification," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 17(3), pages 428-446, 08.
    36. David Hummels & Peter J. Klenow, 2002. "The Variety and Quality of a Nation's Trade," NBER Working Papers 8712, National Bureau of Economic Research, Inc.
    37. Helge Berger & Volker Nitsch, 2010. "The Euro’s Effecton Trade Imbalances," IMF Working Papers 10/226, International Monetary Fund.
    38. R. W. Staiger & G. Tabellini, 1999. "Do Gatt Rules Help Governments Make Domestic Commitments?," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 11(2), pages 109-144, 07.
    39. Tibor Besedes & Thomas J. Prusa, 2004. "Surviving the U.S. Import Market: The Role of Product Differentiation," NBER Working Papers 10319, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Dick Nuwamanya Kamuganga, 2012. "What Drives Africa's Export Diversification?," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 15-2012, Economics Section, The Graduate Institute of International Studies.
    2. Yue Gao & John Whalley & Yonglei Ren, 2013. "Decomposing China's Export Growth into Extensive Margin, Export Quality and Quantity Effects," CESifo Working Paper Series 4251, CESifo Group Munich.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:29169. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.