GLOBAL ECONOMIC CRISIS AND MARGINS OF TRADE-AN EXPLORATION PRITAM CHATTERJEE 1 1 Guest Lecturer,Sarojini Naidu College For Women 30, Jessore Road, Kolkata, West Bengal 700028, -9433652989-ptm_1989@rediffmail.com Abstract- In terms of economic development, it makes a difference whether export increases at the extensive (new trade flows) or intensive margin (traditional, well-established trade flows).Global Economic Crisis,starting from US, then Europe,really started to showing its effect on 2008.Not only the GDP declines,but also world trade declines rapidly.There are two types of trade margins-1)Extensive and 2)Intensive . This paper seeks to determine whether the recent decline in international trade has affected relatively more trade at the extensive margin or at the intensive margin..Time period is 2003-2012,from these,2003-2007 is the pre crisis period and 2008-2012 is the crisis and post crisis period. The overall results indicate that the economic crisis of 2008 and 2009 has had more severe implications for those bilateral trade flows that did not exist before 2006. The analysis is done for Emerging Market Economies as EMEs are fastest growing economy. JEL CLASSIFICATIONS-C1,F1 Keywords-Crisis,Intensive Margin,Extensive Margin,Bilateral Trade,Emerging Market Economy 1. INTRODUCTION- The world economy started slowing down since the third quarter of 2008 leading to an economic crises worldwide. GDP declined from an average growth of 3 per cent during 2003-2007 to 1.5 per cent during 2008-2012. The decline of world GDP growth was the sharpest at 42 per cent during the third quarter of 2008 to the second quarter of 2009. Not only capital inflows to developing and emerging market economies declined during this period, there has been significant shrinking of markets for developing country exports. World trade declined rapidly beginning in the third quarter of 2008 through the second quarter of 2009 . World trade declined in real terms by 12.2 per cent during 2008-2010, with a larger decline of 30 per cent in world trade between the third quarter of 2008 and the last quarter of 2009 (UNCTAD, 2009). This recent global economic slowdown originated in the financial sector of the United States, where the housing market sold sub-prime mortgages to large number of consumers with inadequate income.The financial crisis very rapidly spreaded to real sector in the US economy. The economic crises spreaded to Europe and then to rest of the world. There was a short-lived recovery in 2010, but the global economoy slipped into deep recession in the latter half of 2011. During the crises since 2008, there is a change in trade pattern as well. While it is important to understand that there might have been loss of trading partners, trade intensity with respect to traditional trading partner fell substantially as well. Further, trade in new products might have been adversely affected during crises, trade in traditional products, even though survived, could have declined. The adverse impact of crises could have been larger in Emerging 1 Guest Lecturer,Sarojini Naidu College For Women-9433652989-ptm_1989@rediffmail.com Pritam Chatterjee, Int.J.Eco.Res, 2016, v7i1, 27 - 43 ISSN: 2229-6158 IJER - JAN - FEB 2016 Available online@www.ijeronline.com 27