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Trade Liberalization and Import Margins

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  • Richard Frensch

Abstract

Trade policy has well-documented effects on trade volumes. Reaching beyond volumes, I explore the effect of European emerging economies' recent institutional trade liberalization on extensive (i.e., the set of imported goods) versus intensive import margins (volumes per imported good) with highly disaggregated data. Differentiating goods categories by use, I find robust evidence of stronger extensive import margin effects of liberalization for intermediate and capital goods compared to consumer goods. This identifies an important channel for the link between reforms and growth in transition. The results also support new models of heterogeneous firms and trade, which predict that extensive import margin effects of a country's institutional trade liberalization should—through lowering fixed costs for rest-of-the-world exporters—increase with decreasing substitutability among products.

Suggested Citation

  • Richard Frensch, 2010. "Trade Liberalization and Import Margins," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(3), pages 4-22, May.
    • Handle: RePEc:mes:emfitr:v:46:y:2010:i:3:p:4-22
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    Citations

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    Cited by:

    1. Richard Frensch & Jan Hanousek & Evzen Kocenda, 2016. "Trade in Parts and Components across Europe," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(3), pages 236-262, June.
    2. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    3. Richard Frensch & Jan Hanousek & Evžen Kočenda, 2012. "Specialization, gravity, and European trade in final goods," Working Papers 320, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    4. Foster, Neil & Poeschl, Johannes & Stehrer, Robert, 2011. "The impact of Preferential Trade Agreements on the margins of international trade," Economic Systems, Elsevier, vol. 35(1), pages 84-97, March.
    5. Florence Oluremi Okeowo & Rafiu Adewale Aregbeshola, 2018. "Trade Liberalization and Performance of the Nigerian Textile Industry," Journal of Economics and Behavioral Studies, AMH International, vol. 10(2), pages 33-47.
    6. Neil Foster, 2012. "Preferential Trade Agreements and the Margins of Imports," Open Economies Review, Springer, vol. 23(5), pages 869-889, November.
    7. Hanousek, Jan & Kočenda, Evžen, 2014. "Factors of trade in Europe," Economic Systems, Elsevier, vol. 38(4), pages 518-535.
    8. Bin Qiu & Kuntal K. Das & W. Robert Reed, 2020. "The Effect of Exchange Rates on Chinese Trade: A Dual Margin Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(15), pages 3709-3731, December.
    9. Goran Petrevski & Jane Bogoev & Bruno Sergi, 2012. "The link between central bank independence and inflation in Central and Eastern Europe: are the results sensitive to endogeneity issue omitted dynamics and subjectivity bias?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(4), pages 611-652.
    10. Richard Frensch & Jan Hanousek & Evžen Kocenda, 2012. "Incomplete Specialization and Offshoring across Europe," CESifo Working Paper Series 3809, CESifo.
    11. Himanshu Jaiswal & A. Ganesh Kumar, 2024. "A New mechanism for trade agreements to revitalize the global value chains," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2024-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    12. Christodoulopoulou, Styliani, 2010. "THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade," MPRA Paper 29169, University Library of Munich, Germany.
    13. Ainura Uzagalieva & Evžen Kocenda & Antonio Menezes, 2012. "Technological Innovation in New EU Markets," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(5), pages 48-65, September.
    14. Rod Falvey & Neil Foster-McGregor, 2022. "The breadth of preferential trade agreements and the margins of exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 181-251, February.
    15. Richard Frensch & Jan Hanousek & Evžen Kočenda, 2013. "Obchod s fiskálními statky v Evropské unii: Analýza za pomoci gravitačního modelu [Trade with Final Goods in European Union: A Gravity Model Approach]," Politická ekonomie, Prague University of Economics and Business, vol. 2013(6), pages 715-734.
    16. Jan Hanousek & Evžen Kočenda, 2015. "Determinanty evropského zahraničního obchodu: instituce, kultura, infrastruktura a geografie [Determinants of the European Trade: Institutions, Culture, Infrastructure and Geography]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(5), pages 624-640.

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