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The DR-CAFTA and the extensive margin : a firm-level analysis

Author

Listed:
  • Molina, Ana Cristina
  • Bussolo, Maurizio
  • Iacovone, Leonardo

Abstract

This paperexamines the export behavior of Dominican Republic exporters following the implementation of the Dominican Republic-Central America Free Trade Agreement in 2007. Using a firm-level dataset for 2002-2009, the authors investigate the effects of a tariff reduction on the extensive margin. The analysis distinguishes the impact on the entry of new firms, exports of new products, and entry into the Agreement’s markets. The paper analyzes whether the agreement prevents incumbent exporters from exiting the market. The results suggest that tariff cuts had a positive although very small effect on the extensive margin. A decline in tariffs also seems to reduce the probability of exit, but the effect is also small. The evidence calls for complementary policies aiming at helping exporters maximize the benefits of the agreement.

Suggested Citation

  • Molina, Ana Cristina & Bussolo, Maurizio & Iacovone, Leonardo, 2010. "The DR-CAFTA and the extensive margin : a firm-level analysis," Policy Research Working Paper Series 5340, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5340
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    Citations

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    Cited by:

    1. repec:ilo:ilowps:469183 is not listed on IDEAS
    2. Cadot, Olivier & Iacovone, Leonardo & Pierola, Martha Denisse & Rauch, Ferdinand, 2013. "Success and failure of African exporters," Journal of Development Economics, Elsevier, vol. 101(C), pages 284-296.
    3. Calvo Clúa, Rosalia & Cruz-Rodríguez, Alexis, 2016. "Implicancias del DR-CAFTA sobre el comercio intraindustrial de la República Dominicana [Implications of DR-CAFTA on intra-industry trade of the Dominican Republic]," MPRA Paper 73009, University Library of Munich, Germany.
    4. Emanuel Ornelas, 2012. "Preferential Trade Agreements and the Labor Market," CEP Discussion Papers dp1117, Centre for Economic Performance, LSE.
    5. 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.
    6. Hejazi, Mina & Grant, Jason H. & Peterson, Everett, 2017. "Tariff Changes and the Margins of Trade: A Case Study of U.S. Agri-Food Imports," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(1), pages 1-22, January.

    More about this item

    Keywords

    Free Trade; Markets and Market Access; Debt Markets; Export Competitiveness; Trade Policy;
    All these keywords.

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