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

50 Pages Posted: 15 Jun 2016

See all articles by Lionel Fontagne

Lionel Fontagne

University of Paris 1 Panthéon Sorbonne; Paris School of Economics; CEPII

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

Fontagne, 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

Lionel Fontagne (Contact Author)

University of Paris 1 Panthéon Sorbonne ( email )

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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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