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Trade Facilitation and the Extensive Margin

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  • Persson, Maria

    () (Research Institute of Industrial Economics (IFN))

Abstract

The literature on trade facilitation has mostly focused on implications for trade volumes. However, recent theoretical contributions have emphasized that trade costs – such as transaction costs related to cross-border trade procedures – affect both the traded volumes of “old” goods (the intensive margin) and the range of traded goods (the extensive margin). This paper therefore tests whether trade facilitation affects the extensive margin by counting the number of 8-digit products that are exported from developing to EU countries, and using this as the dependent variable in an estimation. Moreover, it also tests whether the extensive margins in differentiated and homogeneous goods are affected in the same way by transaction costs. Estimation results suggest that if export transaction costs – proxied by the number of days needed to export a good – declined by 1 per cent, the number of exported differentiated and homogeneous products would rise by 0.7 and 0.4 per cent respectively. Policy simulations further illustrate that if all countries were as efficient at the border as the most efficient country at the same level of development, the number of exported differentiated and homogeneous products would increase by 64 and 29 per cent respectively.

Suggested Citation

  • Persson, Maria, 2010. "Trade Facilitation and the Extensive Margin," Working Paper Series 828, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0828
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    Citations

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    Cited by:

    1. Persson, Maria, 2012. "From trade preferences to trade facilitation: Taking stock of the issues," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-33.
    2. Volpe Martincus, Christian & Carballo, Jerónimo & Graziano, Alejandro, 2015. "Customs," Journal of International Economics, Elsevier, vol. 96(1), pages 119-137.
    3. Margherita Scoppola & Valentina Raimondi & Alessandro Olper, 2014. "The impact of EU trade preferences on the extensive and intensive margins of agricultural and food products," FOODSECURE Working papers 22, LEI Wageningen UR.
    4. Ferguson, Shon & Forslid, Rikard, 2014. "Sizing Up the Impact of Embassies on Exports," Working Paper Series 1012, Research Institute of Industrial Economics.
    5. Bourdet, Yves & Persson, Maria, 2011. "Reaping the Benefits of Deeper Euro-Med Integration Through Trade Facilitation," Working Papers 2011:15, Lund University, Department of Economics.
    6. Santos Silva, J.M.C. & Tenreyro, Silvana & Wei, Kehai, 2014. "Estimating the extensive margin of trade," Journal of International Economics, Elsevier, vol. 93(1), pages 67-75.
    7. 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.
    8. Volpe Martincus, Christian & Carballo, Jerónimo & Graziano, Alejandro, 2015. "Customs," Journal of International Economics, Elsevier, vol. 96(1), pages 119-137.
    9. Daniel Saslavsky & Ben Shepherd, 2014. "Facilitating international production networks: The role of trade logistics," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(7), pages 979-999, October.
    10. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2015. "The Experience of Survival: Determinants of Export Survival in Lao PDR," World Development, Elsevier, vol. 76(C), pages 82-94.
    11. Beverelli, Cosimo & Neumüller, Simon & Teh, Robert, 2014. "A new look at the extensive trade margin effects of trade facilitation," WTO Staff Working Papers ERSD-2014-16, World Trade Organization (WTO), Economic Research and Statistics Division.
    12. Cletus C. Coughlin, 2012. "Extensive and intensive trade margins: a state-by-state view," Working Papers 2012-002, Federal Reserve Bank of St. Louis.
    13. Giray Gozgor & Muhlis Can, 2016. "Effects of the product diversification of exports on income at different stages of economic development," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 215-235, August.
    14. Mendoza Alcantara,Alejandra & Fernandes,Ana Margarida & Hillberry,Russell Henry & Mendoza Alcantara,Alejandra & Fernandes,Ana Margarida & Hillberry,Russell Henry, 2015. "Understanding the operations of freight forwarders : evidence from Serbia," Policy Research Working Paper Series 7311, The World Bank.
    15. Hayakawa, Kazunobu & Laksanapanyakul, Nuttawut & Yoshimi, Taiyo, 2016. "Effect of import time on export patterns," IDE Discussion Papers 566, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    16. Jerónimo Carballo & Alejandro Graziano & Georg Schaur & Christian Volpe Martincus, 2016. "Endogenous Border Times," IDB Publications (Working Papers) 94638, Inter-American Development Bank.
    17. Nguyen, Cuong, 2013. "Poverty, Inequality and Trade Facilitation in Low and Middle Income Countries," MPRA Paper 50312, University Library of Munich, Germany.
    18. Viroj Jienwatcharamongkhol, 2014. "Distance Sensitivity of Export: A Firm-Product Level Approach," Journal of Industry, Competition and Trade, Springer, vol. 14(4), pages 531-554, December.
    19. Beverelli, Cosimo & Neumueller, Simon & Teh, Robert, 2015. "Export Diversification Effects of the WTO Trade Facilitation Agreement," World Development, Elsevier, vol. 76(C), pages 293-310.
    20. Jerónimo Carballo & Alejandro Graziano & Georg Schaur & Christian Volpe Martincus, 2016. "Endogenous Border Times," IDB Publications (Working Papers) 7685, Inter-American Development Bank.
    21. repec:idb:idbbks:7994 is not listed on IDEAS
    22. Fernandes,Ana Margarida & Hillberry,Russell Henry & Mendoza Alcantara,Alejandra & Fernandes,Ana Margarida & Hillberry,Russell Henry & Mendoza Alcantara,Alejandra, 2015. "Trade effects of customs reform : evidence from Albania," Policy Research Working Paper Series 7210, The World Bank.
    23. repec:pal:marecl:v:19:y:2017:i:2:d:10.1057_mel.2015.31 is not listed on IDEAS
    24. Salamat Ali & Richard Kneller & Chris Milner, 2017. "Market-specific trade costs and firm dynamics in Pakistan: Evaluating the US integrated cargo containers control programme," Discussion Papers 2017-02, University of Nottingham, GEP.
    25. Salamat Ali, 2016. "Export Response to Sanitary and Phytosanitary Measures and Technical Barriers to Trade: Firm-level Evidence from a Developing Country," Discussion Papers 2016-02, University of Nottingham, CREDIT.

    More about this item

    Keywords

    Trade Facilitation; Extensive Margin; Export Diversification; Differentiated Products; Homogeneous Products; European Union; Developing Countries;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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