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Intensive and Extensive Margins of South–South–North Trade: Firm-Level Evidence

Author

Listed:
  • Lili Yan ING

    (Economic Research Institute for ASEAN and East Asia (ERIA) and University of Indonesia)

  • Miaojie YU

    (CCER, Peking University)

Abstract

The main value added of our paper is twofold. First, we construct a theoretical framework on how South–South trade will affect productivity cut-offs. Second, we present empirical exercises using highly disaggregated data. Our model is based on the South–South–North trade framework. Using a vertical integration among Southern countries (Indonesia and China) and testing it by employing merged Chinese firms and customs trade data, we find that three types of tariff reductions—foreign tariff reductions, home output tariff reductions, and home input tariff reductions—significantly increase home country firm productivity and exports via extensive and intensive margins. Our findings are robust using ex-ante and expost productivity.

Suggested Citation

  • Lili Yan ING & Miaojie YU, 2015. "Intensive and Extensive Margins of South–South–North Trade: Firm-Level Evidence," Working Papers DP-2015-70, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2015-70
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    References listed on IDEAS

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    More about this item

    Keywords

    China; Indonesia; Tariff; Exports; Manufacturing;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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