The Extensive Margin of International Trade in a Transition Economy: The Case of Mongolia
Using the Kehoe and Ruhl (2009) methodology, we investigate whether the variety of traded goods, which is the extensive margin of trade, has actually changed in a transition economy, such as Mongolia, as predicted by recent theoretical models. We find large increases in the extensive margin of Mongolia fs trade with major trade partners such as Japan from 1997 to 2002, when Mongolia was undergoing significant structural reforms. We also find large increases in the extensive margin for the Mongolia-China and Mongolia-EU pairs after trade liberalizations due to China fs accession to the World Trade Organization (WTO) (2001) and Mongolia fs eligibility for the EU Generalized Systems of Preferences (GSP+) scheme (2005). We, however, find no increases in the extensive margin for the Mongolia-Russia pair during the period 2002 to 2007, when there was no major change in the trade regime of these two countries. For each episode, we evaluate whether the extensive margin growth in Mongolia, measured by the Kehoe and Ruhl methodology, was actually a consequence of the increases in the trade volumes of previously zero or little traded goods. We also show that across country pairs, mineral resources and resources coming from livestock herding contributed most to the increased extensive margin of Mongolia fs exports. Our robustness checks indicate that methodologies other than that of Kehoe and Ruhl fs overstate the extensive margin growth in Mongolia with small trade relationships, while they understate in developed countries with large trade relationships as documented by Kehoe and Ruhl.
|Date of creation:||Aug 2011|
|Date of revision:|
|Contact details of provider:|| Postal: 1-1-1 Tennodai, Tsukuba, Ibaraki 305-8571|
Web page: http://www.econ.tsukuba.ac.jp/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kurokawa, Yoshinori, 2006.
"Trade and Variety-Skill Complementarity: A Simple Trade-Based Resolution of Wage Inequality Anomaly,"
14011, University Library of Munich, Germany.
- Yoshinori Kurokawa, 2011. "Variety-skill complementarity: a simple resolution of the trade-wage inequality anomaly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(2), pages 297-325, February.
- Yoshinori Kurokawa, 2009. "Variety-Skill Complementarity: A Simple Resolution of the Trade-Wage Inequality Anomaly," Tsukuba Economics Working Papers 2009-007, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
- Hillberry, Russell H. & McDaniel, Christine A., 2002.
"A Decomposition of North American Trade Growth since NAFTA,"
15866, United States International Trade Commission, Office of Economics.
- Russell Hillberry & Christine McDaniel, 2003. "A Decomposition of North American Trade Growth since NAFTA," International Trade 0303003, EconWPA.
- Besedes, Tibor & Prusa, Thomas J., 2011.
"The role of extensive and intensive margins and export growth,"
Journal of Development Economics,
Elsevier, vol. 96(2), pages 371-379, November.
- Tibor Besedes & Thomas J. Prusa, 2007. "The Role of Extensive and Intensive Margins and Export Growth," NBER Working Papers 13628, National Bureau of Economic Research, Inc.
- Costas Arkolakis, 2010.
"Market Penetration Costs and the New Consumers Margin in International Trade,"
Journal of Political Economy,
University of Chicago Press, vol. 118(6), pages 1151 - 1199.
- Costas Arkolakis, 2008. "Market Penetration Costs and the New Consumers Margin in International Trade," NBER Working Papers 14214, National Bureau of Economic Research, Inc.
- Gabriel J. Felbermayr & Wilhelm Kohler, 2004.
"Exploring the Intensive and Extensive Margins of World Trade,"
CESifo Working Paper Series
1276, CESifo Group Munich.
- Gabriel J. Felbermayr & Wilhelm Kohler, 2006. "Exploring the Intensive and Extensive Margins of World Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 642-674, December.
- Felbermayr, Gabriel & Kohler, Wilhelm K., 2006. "Exploring the intensive and extensive margins of world trade," Munich Reprints in Economics 20610, University of Munich, Department of Economics.
- Kim J. Ruhl, 2008. "The International Elasticity Puzzle," Working Papers 08-30, New York University, Leonard N. Stern School of Business, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:tsu:tewpjp:2011-005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Yoshinori Kurokawa)
If references are entirely missing, you can add them using this form.