The Impact of the Global Economic Crisis on Trade Flows in Emerging Market Economies: A Study of Extensive and Intensive Margins

Abstract

This study analyses the impact of the global economic crisis that began in 2008 on trade flows in emerging market economies (EMEs). Using data from 2003 to 2012, including the pre-crisis period of 2003-2007 and the crisis and post-crisis period of 2008-2012, the study focuses on the impact of the crisis on trade at the extensive and intensive margins. The results show that the crisis had a more severe impact on bilateral trade flows that did not exist before 2006. This study adds to the existing literature on the effects of economic crises on international trade and provides insights into the implications for EMEs. The global economic crisis led to a decline in world trade and shrinking markets for developing country exports, which impacted EMEs as they heavily rely on international trade for their economic growth. Policymakers need to understand the impact of the crisis on trade at the extensive and intensive margins to design appropriate strategies to promote economic growth in EMEs.