The Impact of Trade Facilitation on the Extensive and Intensive Margins of Trade: An Application for Developing Countries
Journal of East Asian Economic Integration, Vol. 16, No. 1 (March 2012) 67-96
30 Pages Posted: 30 Aug 2013 Last revised: 8 Nov 2016
Date Written: February 2, 2012
Abstract
Previous literature has looked merely into the effect of trade facilitation on aggregate trade, or analyzed trade growth using the extensive and intensive margins. This paper blends these two lines of research for a detailed analysis of the impact of trade facilitation on trade by using highly disaggregated trade data and a more composite index for measuring trade facilitation, also taking into account the export sectors and income levels of countries. As a result, this paper finds that developing countries with higher trade facilitation levels export a wider range of products, especially primary goods. While trade facilitation levels do not have a statistically significant association with trade at the intensive margin in general, further analysis shows that the impact of advanced trade facilitation is the largest for lower middle-income countries in primary goods trade at the intensive margin, and the largest for upper middle-income countries in manufactured goods trade at the intensive margin. More importantly, our policy simulation results suggest that trade facilitation-related policy reforms enable developing countries to benefit from increased trade in manufactured goods at the extensive margin.
Keywords: Trade facilitation, Extensive margin, Intensive margin, Primary and manufactured exports, Income level groups
JEL Classification: F17, F41, O13, O14
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Economic Development as Self-Discovery
By Ricardo Hausmann and Dani Rodrik
-
Economic Development as Self-Discovery
By Ricardo Hausmann and Dani Rodrik
-
Economic Development as Self-Discovery
By Ricardo Hausmann and Dani Rodrik
-
By Jean M. Imbs and Romain T. Wacziarg
-
By Jean M. Imbs and Romain T. Wacziarg
-
By Ricardo Hausmann, Jason Hwang, ...
-
By Ricardo Hausmann, Jason Hwang, ...
-
By Dani Rodrik, Ricardo Hausmann, ...
-
Industrial Policy for the Twenty-First Century
By Dani Rodrik
-
Industrial Policy for the Twenty-First Century
By Dani Rodrik