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approach treats each good and each destination market as the same. It does
not take into account the relative importance of the goods in the world market,
or different characteristics of the destination markets. Thus, exporting a small
good (in terms of its share in the world exports) to a less competitive destination
is considered the same as exporting a widely traded good to a more competi-tive
destination. In order to compute the extensive margin more accurately, one
needs a measure that gives different weights to different varieties. The weighted
measure of the extensive margin applied hereafter weights each good-market
category by its share in the rest of the world exports, minimizing the risk of
overstatement of the variety growth (Hummels and Klenow, 2005).
I calculated the extensive and intensive margins of exports of each country
and year, according to the equations (2.2) and (2.3). Then, I took the average
values for the periods 1995-2003 and 2004-2012 separately. Table 2.5 reports the
growth in the extensive and intensive margins of exports along with the growth
in total exports between the periods of pre- and post-EU for each country in
the sample, broken down by different levels of aggregation and different variety
definitions. Columns three and four take a variety as a good-market category,
letting destination markets, along with the exported goods, vary in terms of
profitability, as suggested by Helpman et al. (2008). Whereas, columns five and
six treat each HS-product category as a different variety, giving different weights
to goods, but same weights to each market. That is, if a country exports the same
set of goods in each period, but to a larger set of partners in the second period, it
will have a larger extensive margin growth in column three. The overall sample
statistics are reported in Table 2.6. The values in Table 2.6 are calculated by
computing each statistic over the average growth rates of the sample countries
except Turkey.
86
Object Description
| Title | Empirical essays on trade liberalization and export diversification |
| Author | Kartalciklar, Bahar |
| Author email | kartalci@usc.edu;bkartalciklar@gmail.com |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Economics |
| School | College of Letters, Arts and Sciences |
| Date defended/completed | 2016-09-08 |
| Date submitted | 2016-11-12 |
| Date approved | 2016-11-15 |
| Restricted until | 2016-11-15 |
| Date published | 2016-11-15 |
| Advisor (committee chair) | Dekle, Robert |
| Advisor (committee member) |
Betts, Caroline Nakano, Aiichiro |
| Abstract | This dissertation is composed of two essays, whose objective is to better understand the effects of trade liberalization on the export variety, and the impact of the change in the export structure on the output volatility during liberalization episodes. ❧ In the first chapter, I investigate the effects of trade liberalization on output volatility. Traditional comparative advantage theory such as Heckscher‐Ohlin and the New Trade Theory pioneered by Krugman and Melitz are at odds when predicting the effects of trade liberalization on export diversification. The traditional view is that trade openness results in greater trade specialization and generates output volatility by exposing countries to external shocks. The new trade theory on the other hand implies that trade liberalization leads to growth in the extensive margin of exports. This expansion in the extensive export margin leads to greater export diversification. More diversified markets mean that with more trade liberalization; countries are less exposed to external shocks. ❧ Matching highly disaggregated export data with aggregate‐ and industry‐level production data of Central and Eastern European Countries (CEECs) that joined the EU in 2004, I revisit the openness and volatility link with a particular focus on the effects of the extensive margin of exports. The entry of the Central and Eastern European Countries into trade relationships with the West after the end of the Cold War represents a unique natural experiment. My statistical analysis shows that although more openness increases volatility, this effect can be stabilized through sufficiently diversified export baskets. I find that trade liberalization episodes result in major growth of the extensive margin of exports. I demonstrate that this export expansion has a consistent and significantly negative effect on both per‐capita GDP and sectoral output volatility. Specifically, for the average country and the sector, a 10% increase in the extensive margin of exports leads to 4.6% decline in per-capita GDP volatility and 1.12% decline in sectoral output volatility. I also find that the geographical diversification of exports is a more dominant factor in reducing output volatility, than increase in the product variety. ❧ In the second chapter, I study, empirically, the impact of trade liberalization on the extensive margin of exports. Using the highly disaggregated trade data used in the previous chapter, I investigate the evolution of the extensive margin of exports of the CEECs following their accession to the EU. I employ different measures of export diversification including simple count of products‐market pairs, the least‐traded goods approach developed by Kehoe and Ruhl (2013) and the weighted count measure developed by Hummels and Klenow (2005). I show that the startling growth rates in the exports between pre‐ and post‐EU periods are strongly associated with a sizable expansion in the variety of the product‐market pairs the CEECs trade in. Specifically, I find that following the EU accession; the CEECs experienced a 42.4% growth in the extensive margin of exports, whereas the intensive margin growth remained at 18.9%. I demonstrate that this expansion largely depends upon the growth in the number of destination markets. I further show that the share of the least traded goods in 1995 rises by at least 30% by the end of the period in study, pointing to a major enlargement of the export baskets of the CEECs. My empirical analysis shows that the growth in the extensive margin starts five years ahead of the EU agreement. I further decompose the relative export growth (with respect to the rest of the world) into its extensive and intensive margin components and find that on average the relative exports of the CEECs grow by 61.3%, to which the contribution of the extensive margin is 80.5%, whereas the contribution of the intensive margin is 19.5%. |
| Keyword | international trade; international economics; empirical macroeconomics; extensive margin of exports; output volatility; trade diversification; new trade theory; international macroeconomics; trade growth; trade openness; export diversification |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m |
| Contributing entity | University of Southern California |
| Rights | Kartalciklar, Bahar |
| Physical access | The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the author, as the original true and official version of the work, but does not grant the reader permission to use the work if the desired use is covered by copyright. It is the author, as rights holder, who must provide use permission if such use is covered by copyright. The original signature page accompanying the original submission of the work to the USC Libraries is retained by the USC Libraries and a copy of it may be obtained by authorized requesters contacting the repository e-mail address given. |
| Repository name | University of Southern California Digital Library |
| Repository address | USC Digital Library, University of Southern California, University Park Campus MC 7002, 106 University Village, Los Angeles, California 90089-7002, USA |
| Repository email | cisadmin@lib.usc.edu |
| Filename | etd-Kartalcikl-4917.pdf |
| Archival file | Volume15/etd-Kartalcikl-4917-0.pdf |
Description
| Title | Page 98 |
| Full text | approach treats each good and each destination market as the same. It does not take into account the relative importance of the goods in the world market, or different characteristics of the destination markets. Thus, exporting a small good (in terms of its share in the world exports) to a less competitive destination is considered the same as exporting a widely traded good to a more competi-tive destination. In order to compute the extensive margin more accurately, one needs a measure that gives different weights to different varieties. The weighted measure of the extensive margin applied hereafter weights each good-market category by its share in the rest of the world exports, minimizing the risk of overstatement of the variety growth (Hummels and Klenow, 2005). I calculated the extensive and intensive margins of exports of each country and year, according to the equations (2.2) and (2.3). Then, I took the average values for the periods 1995-2003 and 2004-2012 separately. Table 2.5 reports the growth in the extensive and intensive margins of exports along with the growth in total exports between the periods of pre- and post-EU for each country in the sample, broken down by different levels of aggregation and different variety definitions. Columns three and four take a variety as a good-market category, letting destination markets, along with the exported goods, vary in terms of profitability, as suggested by Helpman et al. (2008). Whereas, columns five and six treat each HS-product category as a different variety, giving different weights to goods, but same weights to each market. That is, if a country exports the same set of goods in each period, but to a larger set of partners in the second period, it will have a larger extensive margin growth in column three. The overall sample statistics are reported in Table 2.6. The values in Table 2.6 are calculated by computing each statistic over the average growth rates of the sample countries except Turkey. 86 |
