Working Paper Series
Trade Facilitation and the Extensive Margin
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.
Keywords: Trade Facilitation; Extensive Margin; Export Diversification; Differentiated Products; Homogeneous Products; European Union; Developing Countries; (follow links to similar papers)
JEL-Codes: C21; F13; O24; (follow links to similar papers)
23 pages, April 13, 2010
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- This paper is forthcoming as:
Persson, Maria, 'Trade Facilitation and the Extensive Margin', Journal of International Trade and Economic Development.
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