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

Lili Yan Ing and Miaojie Yu

No DP-2015-70, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

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.

Keywords: China; Indonesia; Tariff; Exports; Manufacturing (search for similar items in EconPapers)
JEL-codes: F1 F13 F14 (search for similar items in EconPapers)
Pages: 37 pages.
Date: 2015-09
New Economics Papers: this item is included in nep-bec, nep-cna, nep-int, nep-sea and nep-tra
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