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The Impact of Trade Facilitation on the Extensive and Intensive Margins of Trade: An Application for Developing Countries

Author

Listed:
  • Lee, Hyo-young

    (Seoul National University)

  • Kim , Chong-Sup

    (Seoul National University)

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 paperPrevious 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.

Suggested Citation

  • Lee, Hyo-young & Kim , Chong-Sup, 2012. "The Impact of Trade Facilitation on the Extensive and Intensive Margins of Trade: An Application for Developing Countries," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 16(1), pages 67-96, March.
    • Handle: RePEc:ris:eaerev:0079
    DOI: 10.11644/KIEP.JEAI.2012.16.1.243
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    Citations

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    Cited by:

    1. Luis Marcelo Florensa & Laura Márquez-Ramos & María Luisa Recalde & María Victoria Barone, 2014. "Does economic integration increase trade margins? Empirical evidence from LAIAs countries," Working Papers 2014/05, Economics Department, Universitat Jaume I, Castellón (Spain).
    2. Luis Florensa & Laura Márquez-Ramos & María Recalde, 2015. "The effect of economic integration and institutional quality of trade agreements on trade margins: evidence for Latin America," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 329-351, May.
    3. Said, Rashidi & Ismail, Normaz Wana, 2018. "The Impacts of Malaysian Free Trade Agreements on Margins of Trade," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 169-178.
    4. Nguyen, Cuong, 2013. "Poverty, Inequality and Trade Facilitation in Low and Middle Income Countries," MPRA Paper 50312, University Library of Munich, Germany.
    5. Mamta Kumari & Nalin Bharti, 2021. "Trade and logistics performance: does country size matter?," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(3), pages 401-423, September.
    6. Kemal Türkcan & Socrates Kraido Majune, 2022. "Logistics infrastructure and export survival in European Union countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(2), pages 509-535, May.

    More about this item

    Keywords

    Trade Facilitation; Extensive Margin; Intensive Margin; Primary and Manufactured Exports; Income Level Groups;
    All these keywords.

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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