The Dr-Cafta and the Extensive Margin: A Firm-Level Analysis

35 Pages Posted: 20 Apr 2016

See all articles by Ana Cristina Molina

Ana Cristina Molina

affiliation not provided to SSRN

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Leo Iacovone

World Bank; University of Sussex

Date Written: June 1, 2010

Abstract

This paper examines the export behavior of Dominican Republic exporters following the implementation of the Dominican Republic-Central America Free Trade Agreement in 2007. Using a firm-level dataset for 2002-2009, the authors investigate the effects of a tariff reduction on the extensive margin. The analysis distinguishes the impact on the entry of new firms, exports of new products, and entry into the Agreement?s markets. The paper analyzes whether the agreement prevents incumbent exporters from exiting the market. The results suggest that tariff cuts had a positive although very small effect on the extensive margin. A decline in tariffs also seems to reduce the probability of exit, but the effect is also small. The evidence calls for complementary policies aiming at helping exporters maximize the benefits of the agreement.

Keywords: Free Trade, Markets and Market Access, Debt Markets, Export Competitiveness, Trade Policy

Suggested Citation

Molina, Ana Cristina and Bussolo, Maurizio and Iacovone, Leonardo, The Dr-Cafta and the Extensive Margin: A Firm-Level Analysis (June 1, 2010). World Bank Policy Research Working Paper No. 5340. Available at SSRN: https://ssrn.com/abstract=1626689

Ana Cristina Molina (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

Leonardo Iacovone

World Bank ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

HOME PAGE: http://www.worldbank.org

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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