The Role of Extensive and Intensive Margins and Export Growth

Title: The Role of Extensive and Intensive Margins and Export Growth
Format: Journal Article
Publication Date: November 2011
Published In: Journal of Development Economics

We investigate and compare countries' export growth based on their performance at the extensive and intensive export margins. Our empirical approach ismotivated by an extension to the Melitz (2003) model of heterogeneous firms in which exporters are subject to a one-time sunk cost and also a per-period fixed cost.  With imperfect information a firm may enter export markets but shortly exit when it learns its per-period fixed costs. We apply this insight to disaggregated export data and confirm that indeed most export relationships are very short lived. We then show that the survival issue is a significant factor in explaining differences in long run export performance. We find that developing countries would experience significantly higher export growth if they were able to improve their performance with respect to the two key components of the intensive margin: survival and deepening.

Ivan Allen College Contributors:
External Contributors: Thomas J. Prusa

Besedes, Tibor and Thomas J. Prusa. "The Role of Extensive and Intensive Margins and Export Growth." Journal of Development Economics 96 vol. 2 (2011):  371-379.

  • International Trade
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  • School of Economics