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THE NEW GOODS IN BILATERAL TRADE: THE CASE OF CHINA AND THE SLOVAK REPUBLIC
Abstract
Hand in hand with Chinese economic transformation came an opening of China to the world. New opportunities enhanced an integration of the People's Republic of China into the global economy. China's outstanding performance in the goodsВґ export influenced lots of small open economies. In the same time the overall world trade has increased significantly making many researchers ask what is behind this trade growth. Is the trade volume growing on intensive or extensive margin? In this paper we will analyze trade relations between China and Slovakia and the nature of its bilateral trade growth. We analyze whether Sino-Slovak trade grew thanks to the trade in new goods (extensive margin) or because of the increased exports and imports of the previously traded products (intensive margin). We examine data available between the years 2000 and 2012. The methodology used consist in identifying the least traded goods in the base year and comparing how this least traded goods grew during the observed period of time. Their comparatively higher growth to the rest of the goods indicates that Sino-Slovak trade experienced growth on the extensive margin. Our results suggest that during the observed period the trade between China and Slovakia experienced important growth due to the new products traded between these two countries.
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