Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures

50 Pages Posted: 15 Jun 2016

See all articles by Lionel Gérard Fontagné

Lionel Gérard Fontagné

Banque de France; CEPII; University of Paris 1 Panthéon Sorbonne; Paris School of Economics

Gianluca Orefice

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division

Date Written: May 19, 2016

Abstract

This paper considers the asymmetric effect of Trade Facilitation Agreement (TFA) policies on heterogeneous exporters, based on matching a detailed panel of French firm exports to a new database of Trade Facilitation Indicators (TFIs) released recently by the Organisation for Economic Cooperation and Development (OECD). We analyze the effect of these TFIs on three trade-related outcomes: (i) exported value (firm intensive margin), (ii) number of products exported (product extensive margin) and (iii) average export value per product exported (product intensive margin). We find strong evidence of a heterogeneous effect of trade facilitation across firm size. While better information availability, advance ruling and appeal procedures mainly benefit small firms, the simplification of documents and automation tend to favor large firms’ trade. This is coherent with the idea that while some elements of the TFA simply reduce the fixed cost of exporting (favoring small firms in particular), other chapters in the TFA reduce the scope for corruption at borders, making large firms less reluctant to serve corrupt countries.

Keywords: trade facilitation, heterogeneous firms, extensive margin, intensive margin

JEL Classification: F130, F140

Suggested Citation

Fontagné, Lionel and Orefice, Gianluca and Piermartini, Roberta, Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures (May 19, 2016). CESifo Working Paper Series No. 5899, Available at SSRN: https://ssrn.com/abstract=2795493 or http://dx.doi.org/10.2139/ssrn.2795493

Lionel Fontagné (Contact Author)

Banque de France ( email )

Paris
France

HOME PAGE: http://www.lionel-fontagne.eu/

CEPII ( email )

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University of Paris 1 Panthéon Sorbonne ( email )

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Paris School of Economics ( email )

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HOME PAGE: http://lionelfontagne.weebly.com/

Gianluca Orefice

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland
+41 22 739 5492 (Phone)
+41 22 739 5762 (Fax)

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