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Does WTO Matter for the Extensive and the Intensive Margins of Trade?


  • Dutt, Pushan
  • Mihov, Ilian
  • Van Zandt, Timothy


We use 6-digit bilateral trade data to document the effect of WTO/GATT membership on the extensive and intensive product margins of trade. We construct gravity equations for the two product margins where the specifications of these gravity equations are motivated by the model of Eaton and Kortum (2002). The data show that the puzzle of no significant impact of WTO membership on trade documented by Rose (2004) manifests itself differently at the product margins of trade. We show that the impact of the WTO is almost exclusively on the extensive product margin of trade, i.e. trade in goods that were not previously traded. In our preferred specification, WTO membership increases the extensive margin of exports by 31%. At the same time, WTO membership has a negligible or even a negative impact on the intensive margin (the volume of already-traded goods). Incidentally, we also document that standard gravity variables provide good explanatory power for bilateral trade on both margins.

Suggested Citation

  • Dutt, Pushan & Mihov, Ilian & Van Zandt, Timothy, 2011. "Does WTO Matter for the Extensive and the Intensive Margins of Trade?," CEPR Discussion Papers 8293, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8293

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    References listed on IDEAS

    1. Gabriel J Felbermayr & Wilhelm Kohler, 2014. "Exploring the Intensive and Extensive Margins of World Trade," World Scientific Book Chapters,in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 4, pages 115-148 World Scientific Publishing Co. Pte. Ltd..
    2. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    3. Pushan Dutt & Daniel Traca, 2010. "Corruption and Bilateral Trade Flows: Extortion or Evasion?," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 843-860, November.
    4. Ghosh, Sucharita & Yamarik, Steven, 2004. "Are regional trading arrangements trade creating?: An application of extreme bounds analysis," Journal of International Economics, Elsevier, vol. 63(2), pages 369-395, July.
    5. Xuepeng Liu, 2009. "GATT/WTO Promotes Trade Strongly: Sample Selection and Model Specification," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 428-446, August.
    6. repec:lmu:muenar:20646 is not listed on IDEAS
    7. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
    8. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2006. "Trading Partners and Trading Volumes," DEGIT Conference Papers c011_022, DEGIT, Dynamics, Economic Growth, and International Trade.
    Full references (including those not matched with items on IDEAS)


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    Cited by:

    1. Maria Persson & Fredrik Wilhelmsson, 2016. "EU Trade Preferences and Export Diversification," The World Economy, Wiley Blackwell, vol. 39(1), pages 16-53, January.
    2. Dan Ciuriak & Beverly Lapham & Robert Wolfe & Terry Collins-Williams & John M. Curtis, 2011. "New-New Trade Policy," Working Papers 1263, Queen's University, Department of Economics.
    3. Campi, Mercedes & Dueñas, Marco, 2016. "Intellectual Property Rights and International Trade of Agricultural Products," World Development, Elsevier, vol. 80(C), pages 1-18.
    4. Liao, Wei & Santacreu, Ana Maria, 2015. "The trade comovement puzzle and the margins of international trade," Journal of International Economics, Elsevier, vol. 96(2), pages 266-288.
    5. Amighini, Alessia & Sanfilippo, Marco, 2014. "Impact of South–South FDI and Trade on the Export Upgrading of African Economies," World Development, Elsevier, vol. 64(C), pages 1-17.
    6. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2013. "WTO Trade Effects and Identification Problems: Why Knowing The Structural Properties of WTO Memberships Matters?," Discussion Papers Series 491, School of Economics, University of Queensland, Australia.
    7. Natalia Kapelko & Natalya Volchkova, 2013. "Export costs of visa restrictions," Working Papers w0195, Center for Economic and Financial Research (CEFIR).
    8. Parteka, Aleksandra & Tamberi, Massimo, 2013. "Product diversification, relative specialisation and economic development: Import–export analysis," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 121-135.
    9. Scoppola, M. & Raimondi, V. & Olper, A., 2013. "The Impact of EU Trade Preferences on the Extensive and Intensive Agricultural and Food Product Margins," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151145, Agricultural and Applied Economics Association.
    10. Dick Nuwamanya Kamuganga, 2012. "The Linkage between Outcome Differences in Cotton Production and Rural Roads Improvements - A Matching Approach," IHEID Working Papers 15-2012, Economics Section, The Graduate Institute of International Studies.
    11. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, Elsevier.

    More about this item


    extensive margin of trade; Gravity; intensive margin of trade; WTO;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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