Economics at your fingertips  

Economic growth takeoffs and the extensive and intensive margins of trade

Rishav Bista and Brandon Sheridan

Review of Development Economics, 2021, vol. 25, issue 3, 1373-1396

Abstract: In this study, we use a gravity model to investigate the relationship between exports and sudden, prolonged increases in economic growth. Our main contribution is we decompose exports into the extensive and intensive margins when considering this relationship. Using the definition of takeoffs in a country's growth process from Aizenman & Spiegel, we identify 142 economic growth takeoffs. We find that the extensive margin is an important mechanism for export growth and, ultimately, economic growth. We also find evidence that exports increase significantly immediately before, and during, a growth episode, with the extensive margin being entirely responsible for the observed increase in exports. Finally, we find that developing countries see a larger percentage point increase in the extensive margin and decrease in the intensive margin during a takeoff. These results suggest that takeoffs may spur a reduction in the fixed costs to exporting, which propel an increase in the extensive margin. Therefore, export diversification appears to be a potential policy option for those seeking to increase the chances of a growth takeoff in their country, and takeoffs seem to present an opportunity for further export diversification.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669

Access Statistics for this article

Review of Development Economics is currently edited by E. Kwan Choi

More articles in Review of Development Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2023-06-15
Handle: RePEc:bla:rdevec:v:25:y:2021:i:3:p:1373-1396