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The extensive and intensive margins of Spanish trade

Author

Listed:
  • Juan de Lucio
  • Raúl Mínguez-Fuentes
  • Asier Minondo
  • Francisco Requena-Silvente

Abstract

Recent empirical research highlights that differences in trade flows across countries, products and years are governed by two margins: the intensive margin and the extensive margin. The analysis of the relative contribution of each margin is very important to determine which policies can be more efficient to foster trade at the aggregate, geographic, product or firm level. We use the whole universe of firm level transaction data to analyse the relative contribution of these margins to changes in Spanish trade flows during the 1997--2007 period. We first apply the methodology proposed by Bernard et al. (2009) to decompose trade variation over time into three components: net entry of firms, product-country switching and value growth by regular trading firms. The first two components correspond to the extensive margin and the last one refers to the intensive margin. We find that short-run changes in exports and imports are governed by firms’ intensive margin; however, in the long-run, both the extensive and the intensive margins are equally important to foster trade. We also examine the importance of the trade margins at the cross-sectional level for the year 2007. We find that large differences in the Spanish trade flows across countries and products, especially in the case of exports, are explained by the number of firms that participate in trade, which is consistent with the fact that the number of trading partners decline significantly with distance.

Suggested Citation

  • Juan de Lucio & Raúl Mínguez-Fuentes & Asier Minondo & Francisco Requena-Silvente, 2011. "The extensive and intensive margins of Spanish trade," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(5), pages 615-631, January.
  • Handle: RePEc:taf:irapec:v:25:y:2011:i:5:p:615-631 DOI: 10.1080/02692171.2011.557051
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    Cited by:

    1. Joachim Wagner, 2016. "A survey of empirical studies using transaction level data on exports and imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 215-225, February.
    2. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series 6229, The World Bank.
    3. Wagner, Joachim, 2012. "The Microstructure of the Great Export Collapse in German Manufacturing Industries, 2008/2009," IZA Discussion Papers 6393, Institute for the Study of Labor (IZA).
    4. repec:spr:series:v:8:y:2017:i:3:d:10.1007_s13209-017-0157-x is not listed on IDEAS
    5. Wagner, Joachim, 2013. "The granular nature of the great export collapse in German manufacturing industries, 2008/2009," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-21.
    6. Francesca D'Auria & Jesus Maria Irigoyen & Josefa Monteagudo & Plamen Nikolov & Alexander Rutkowski & Michael Sket & Ann-Louise Winther, . "Quarterly Report on the Euro Area (QREA), Vol.11, No.2 (2012)," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2016. "Exporter behavior, country size and stage of development: Evidence from the exporter dynamics database," Journal of Development Economics, Elsevier, vol. 119(C), pages 121-137.
    8. repec:euf:qreuro:0112-03 is not listed on IDEAS
    9. Marianne Matthee & Neil Rankin & Tasha Naughtin & Carli Bezuidenhout, 2016. "The South African manufacturing exporter story," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).
    10. Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2014. "Does the partial year effect invalidate the evidence on new exporters?," Working Papers 1401, Department of Applied Economics II, Universidad de Valencia.
    11. Uribe-Etxeberria, Asier Minondo & Requena Silvente , Francisco, 2012. "The intensive and extensive margins of trade: decomposing exports growth differences across Spanish Regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 23, pages 53-76.
    12. Álvarez López, M.ª Elisa & Vega Crespo, Josefa, 2017. "La fortaleza competitiva de la economía española/The Competitive Strength of the Spanish Economy," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 35, pages 7-34, Enero.
    13. Asier Minondo, 2011. "Exporters of services in Spain," Working Papers 2011R04, Orkestra - Basque Institute of Competitiveness.
    14. María Josefa Garcia Grande & José María López Morales, 2015. "The Agri-Food trade in Spain: specialization and international competition," ERSA conference papers ersa15p450, European Regional Science Association.
    15. De Lucio, Juan & Mínguez, Raúl & Minondo, Asier & Requena, Francisco, 2017. "Los márgenes del crecimiento de las exportaciones españolas antes y después de la Gran Recesión /Spanish Trade Margins before and after the Great Recession," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 35, pages 43-62, Enero.
    16. Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2013. "The dynamics of firms’ export portfolio: A network analysis with an application to Mexico and Bulgaria," Working Papers 1316, Department of Applied Economics II, Universidad de Valencia.
    17. Juan Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2017. "The granularity of Spanish exports," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 8(3), pages 225-259, August.

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