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Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures

Author

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  • Lionel Fontagné
  • Gianluca Orefice
  • Roberta Piermartini

Abstract

This paper considers the asymmetric effect of Trade Facilitation Agreement (TFA) policies on heterogeneous exporters, based on matching a detailed panel of French firm exports to a new database of Trade Facilitation Indicators (TFIs) released recently by the Organisation for Economic Cooperation and Development (OECD). We analyze the effect of these TFIs on three trade-related outcomes: (i) exported value (firm intensive margin), (ii) number of products exported (product extensive margin) and (iii) average export value per product exported (product intensive margin). We find strong evidence of a heterogeneous effect of trade facilitation across firm size. While better information availability, advance ruling and appeal procedures mainly benefit small firms, the simplification of documents and automation tend to favor large firms' trade. This is coherent with the idea that while some elements of the TFA simply reduce the fixed cost of exporting (favoring small firms in particular), other chapters in the TFA reduce the scope for corruption at borders, making large firms less reluctant to serve corrupt countries.

Suggested Citation

  • Lionel Fontagné & Gianluca Orefice & Roberta Piermartini, 2016. "Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures," Working Papers 2016-08, CEPII research center.
    • Handle: RePEc:cii:cepidt:2016-08
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    Cited by:

    1. Christian Volpe Martincus, 2016. "Out of the Border Labyrinth: An Assessment of Trade Facilitation Initiatives in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 96856, February.
    2. Volpe Martincus, Christian, 2016. "Out of the Border Labyrinth: An Assessment of Trade Facilitation Initiatives in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 7994, October.
    3. Peter Neary & Giovanni Maggi & Monika Mrázová, 2018. "Choked by Red Tape? The Political Economy of Wasteful Trade Barriers," Economics Series Working Papers 847, University of Oxford, Department of Economics.
    4. Aggarwal, Sakshi & Chakraborty, Debashis, 2017. "Determinants of India’s Bilateral Intra-Industry Trade over 2001-15: Empirical Results," MPRA Paper 78020, University Library of Munich, Germany.
    5. Fugazza, Marco & Olarreaga, Marcelo & Ugarte, Cristian, 2018. "On the heterogeneous effects of market access barriers: evidence from small and large Peruvian exporters," CEPR Discussion Papers 12876, C.E.P.R. Discussion Papers.
    6. Mamta Kumari & Nalin Bharti, 2021. "Linkages Between Trade Facilitation and Governance: Relevance for Post-COVID-19 Trade Strategy," Millennial Asia, , vol. 12(2), pages 162-189, August.
    7. Jerónimo Carballo & Georg Schaur & Christian Volpe Martincus, 2017. "Transportation and Trade Interactions: A Trade Facilitation Perspective," IDB Publications (Working Papers) 97957, Inter-American Development Bank.
    8. Rebeyrol, Vincent, 2020. "Protection without Discrimination," TSE Working Papers 20-1131, Toulouse School of Economics (TSE).
    9. Chowdhry, Sonali & Felbermayr, Gabriel, 2021. "Trade liberalization along the firm size distribution: The case of the EU-South Korea FTA," Kiel Working Papers 2176, Kiel Institute for the World Economy (IfW Kiel).
    10. Jerónimo Carballo & Georg Schaur & Christian Volpe Martincus, 2018. "Transportation and trade interactions: a trade facilitation perspective," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 14, pages 422-450, Edward Elgar Publishing.
    11. Debashis CHAKRABORTY & Sacchidananda MUKHERJEE, 2016. "How Trade Facilitation Measures influence Export Orientation? Empirical Estimates with Logistics Performance Index Data," Journal of Economics Library, KSP Journals, vol. 3(4), pages 554-569, December.
    12. Hendy, Rana & Zaki, Chahir, 2021. "Trade facilitation and firms exports: Evidence from customs data," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 197-209.

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    More about this item

    Keywords

    Trade Facilitation; Heterogeneous Firms; Extensive Margin; Intensive Margin;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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    This paper has been announced in the following NEP Reports:

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