Publication details

The extensive margin in international trade – the case of the Czech Republic and China



Year of publication 2014
Type Article in Proceedings
Conference New Economic Challenges - 5th International PhD Student Conference
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords trade China Czech Republic extensive margin
Description This paper deals with empirical analysis of international trade between China and the Czech Republic during the last fifteen years. The goal of the paper is to find out if the growth in export is of intensive or extensive type. We follow methodology of Kehoe and Ruhl (2013) and use detailed (four-digit) trade statistics on the value of trade flows by commodity according to Standard International Trade Classification (SITC) codes. We find out that the goods that were traded the least in the benchmark year account for disproportionate share in trade after liberalization and reduc-tion of trade barriers. Between the years 1999 and 2012 there was a significant increase in the goods which had not been traded previously. For the exports from China to the Czech Republic, the set of goods which accounted for only ten percent of trade in 1999 accounts for about forty two percent of trade in 2012. The most significant increase was found between years 2001 and 2002 shortly after China has joined WTO. In the following four years Sino-Czech bilateral trade was not subject to any further trade liberalization and therefore the fraction of least traded goods in total export value remained relatively stable. The importance of extensive margin for the Czech exports to China is even more impressive. The least-traded goods in the year 1999 accounted for almost eighty percent of the trade in the year 2013.
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