Exploring the Intensive and Extensive Margins of World Trade

Gabriel Felbermayr and Wilhelm Kohler

Chapter 4 in European Economic Integration, WTO Membership, Immigration and Offshoring, 2014, pp 115-148 from World Scientific Publishing Co. Pte. Ltd.

Abstract: World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post-World War II growth in manufacturing world trade along these two margins. We propose a “corner-solutions version” of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called “distance puzzle”. It also finds more convincing evidence than recent literature that WTO-membership enhances trade.

Keywords: Economic Integration; WTO Membership; Immigration; Offshoring; European Union; International Trade; Migration; Gravity; Germany; Equilibrium; Tariff Liberalization; Commercial Policy; Eastern Enlargement (search for similar items in EconPapers)
Date: 2014
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Related works:
Journal Article: Exploring the Intensive and Extensive Margins of World Trade (2006)
Working Paper: Exploring the intensive and extensive margins of world trade (2006)
Working Paper: Exploring the Intensive and Extensive Margins of World Trade (2004)
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