The perversity of preferences: GSP and developing country trade policies, 1976-2000
AbstractIndustrial countries maintain special tariff preferences, namely the Generalized System of Preferences (GSP), for importsfrom developing countries. Critics have highlighted the underachieving nature of such preferences, but developing countries continue to place the GSP at the heart of their agenda in multilateral negotiations. What effect do such preferences have on a recipient's own trade policies? The authors develop and test a simple theoretical model of a small country's trade policy choice, using a dataset of 154 developing countries from 1976 through 2000. They find that countries removed from the GSP adopt more liberal trade policies than those remaining eligible. The results, corrected for endogeneity and robust to numerous alternative measures of trade policy, suggest that developing countries may be best served by full integration into the reciprocity-based world trade regime rather than continued GSP-style special preferences.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 78 (2005)
Issue (Month): 1 (October)
Contact details of provider:
Web page: http://www.elsevier.com/locate/devec
Other versions of this item:
- Ozden, Caglar & Reinhardt, Eric, 2003. "The perversity of preferences : GSP and developing country trade policies, 1976 - 2000," Policy Research Working Paper Series 2955, The World Bank.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francisco Rodriguez & Dani Rodrik, 2001.
"Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence,"
in: NBER Macroeconomics Annual 2000, Volume 15, pages 261-338
National Bureau of Economic Research, Inc.
- Rodríguez, Francisco & Rodrik, Dani, 1999. "Trade Policy and Economic Growth: A Sceptic's Guide to the Cross-National Evidence," CEPR Discussion Papers 2143, C.E.P.R. Discussion Papers.
- Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: a Skeptic's Guide to the Cross-National Evidence," Working Papers 9912, Economic Research Forum, revised Apr 1999.
- Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
- Raymond Vreeland, James, 2002. "The Effect of IMF Programs on Labor," World Development, Elsevier, vol. 30(1), pages 121-139, January.
- Arvind Panagariya, 2002.
"Developing Countries at Doha: A Political Economy Analysis,"
The World Economy,
Wiley Blackwell, vol. 25(9), pages 1205-1233, 09.
- Arvind Panagariya, 2003. "Developing Countries at Doha: A Political Economy Analysis," International Trade 0308015, EconWPA.
- Arvind Panagariya, 2002. "EU Preferential Trade Arrangements and Developing Countries," The World Economy, Wiley Blackwell, vol. 25(10), pages 1415-1432, November.
- André Sapir & Lars Lundberg, 1984.
"The U.S. generalized system of preferences and its impacts,"
ULB Institutional Repository
2013/8270, ULB -- Universite Libre de Bruxelles.
- Andr� Sapir & Lars Lundberg, 1984. "The U.S. Generalized System of Preferences and Its Impacts," NBER Chapters, in: The Structure and Evolution of Recent U.S. Trade Policy, pages 195-236 National Bureau of Economic Research, Inc.
- Blonigen, Bruce A. & Bown, Chad P., 2003.
"Antidumping and retaliation threats,"
Journal of International Economics,
Elsevier, vol. 60(2), pages 249-273, August.
- Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
- John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
- Kyle Bagwell & Robert W. Staiger, 1997.
"An Economic Theory of GATT,"
NBER Working Papers
6049, National Bureau of Economic Research, Inc.
- James M. DeVault, 1996. "Political Pressure and the U.S. Generalized System of Preferences," Eastern Economic Journal, Eastern Economic Association, vol. 22(1), pages 35-46, Winter.
- Douglas Staiger & James H. Stock, 1994.
"Instrumental Variables Regression with Weak Instruments,"
NBER Technical Working Papers
0151, National Bureau of Economic Research, Inc.
- Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
- Krishna, Pravin & Mitra, Devashish, 2005. "Reciprocated unilateralism in trade policy," Journal of International Economics, Elsevier, vol. 65(2), pages 461-487, March.
- Rodrik, Dani, 1995. "Political economy of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 28, pages 1457-1494 Elsevier.
- Dollar, David & Kraay, Aart, 2001.
"Trade, growth, and poverty,"
Policy Research Working Paper Series
2615, The World Bank.
- Ray, Edward John, 1987. "The Impact of Special Interests on Preferential Tariff Concessions by the United States," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 187-93, May.
- Coates, Daniel E. & Ludema, Rodney D., 2001. "A theory of trade policy leadership," Journal of Development Economics, Elsevier, vol. 65(1), pages 1-29, June.
- R. W. Staiger & G. Tabellini, 1999. "Do Gatt Rules Help Governments Make Domestic Commitments?," Economics and Politics, Wiley Blackwell, vol. 11(2), pages 109-144, 07.
- John H. Jackson, 1997. "The World Trading System, 2nd Edition: Law and Policy of International Economic Relations," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600277, June.
- Brown, Drusilla K, 1989. "Trade and Welfare Effects of the European Schemes of the Generalized System of Preferences," Economic Development and Cultural Change, University of Chicago Press, vol. 37(4), pages 757-77, July.
- Hoekman, Bernard & Michalopoulos, Constantine & Winters, L. alan, 2003. "More favorable and differential treatment of developing countries : toward a new approach in the World Trade Organization," Policy Research Working Paper Series 3107, The World Bank.
- Katerina Gradeva & Inmaculada Martínez-Zarzoso, 2009. "Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy," Ibero America Institute for Econ. Research (IAI) Discussion Papers 197, Ibero-America Institute for Economic Research.
- Christie, Andrew, 2009. "Special and Differential Treatment in the GATT: A Pyrrhic Victory for Developing Countries," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 10(2).
- Emily Blanchard & Xenia Matschke, 2012. "U.S. Multinationals and Preferential Market Access," CESifo Working Paper Series 3847, CESifo Group Munich.
- Benjamin Shepherd & Patrick Messerlin, 2008. "Development Perspectives on Trade Growth at the Extensive Margin," Sciences Po publications info:hdl:2441/5341, Sciences Po.
- Persson, Maria, 2013. "Trade Preferences from a Policy Perspective," Working Papers 2013:3, Lund University, Department of Economics.
- Bernhard Herz & Marco Wagner, 2011.
"The Dark Side of the Generalized System of Preferences,"
Review of International Economics,
Wiley Blackwell, vol. 19(4), pages 763-775, 09.
- Herz, Bernhard & Wagner, Marco, 2010. "The dark side of the generalized system of preferences," Working Papers 02/2010, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
- Douillet, Mathilde, 2012. "Trade policies and agricultural exports of Sub-Saharan African countries: Some stylized facts and perspectives," MPRA Paper 40962, University Library of Munich, Germany.
- Persson, Maria, 2011.
"From trade preferences to trade facilitation: Taking stock of the issues,"
Economics Discussion Papers
2011-23, Kiel Institute for the World Economy.
- Persson, Maria, 2012. "From trade preferences to trade facilitation: Taking stock of the issues," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(17), pages 1-33.
- Liborio S. Cabanilla, 2006. "Agricultural Trade Between the Philippines and the US : Status, Issues and Prospects," Development Economics Working Papers 22620, East Asian Bureau of Economic Research.
- Kyle Bagwell & Robert W. Staiger, 2012.
"Can the Doha Round be a Development Round? Setting a Place at the Table,"
in: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century
National Bureau of Economic Research, Inc.
- Kyle Bagwell & Robert W. Staiger, 2011. "Can the Doha Round be a Development Round? Setting a Place at the Table," NBER Working Papers 17650, National Bureau of Economic Research, Inc.
- Emanuel Ornelas, 2012.
"Preferential Trade Agreements and the Labor Market,"
CEP Discussion Papers
dp1117, Centre for Economic Performance, LSE.
- Ornelas, Emanuel, 2012. "Preferential trade agreements and the labour market," ILO Working Papers 469183, International Labour Organization.
- Ornelas, Emanuel, 2012. "Preferential Trade Agreements and the Labor Market," CEPR Discussion Papers 8805, C.E.P.R. Discussion Papers.
- repec:ner:sciepo:info:hdl:2441/5341 is not listed on IDEAS
- Agostino, Maria Rosaria & Aiello, Francesco & Cardamone, Paola, 2007. "Analyzing the Impact of Trade Preferences in Gravity Models. Does Aggregation Matter?," Working Papers 7294, TRADEAG - Agricultural Trade Agreements.
- Federica DeMaria & Sophie Drogué & Alan Matthews, 2008.
"Agro-Food Preferences in the EU's GSP Scheme: An Analysis of Changes Between 2004 and 2006,"
Development Policy Review,
Overseas Development Institute, vol. 26(6), pages 693-712, November.
- DeMaria, Federica & Drogue, Sophie & Matthews, Alan, 2008. "Agro-Food Preferences in the EU's GSP Scheme: An Analysis of Changes between 2004 and 2006," Working Papers 6151, TRADEAG - Agricultural Trade Agreements.
- Morrissey, Oliver & Zgovu, Evious, 2008. "The Impact of Economic Partnership Agreements on African, Caribbean and Pacific Countries Imports and Welfare," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44205, European Association of Agricultural Economists.
- Shalah Mostashari, 2011. "Vertical specialization, intermediate tariffs, and the pattern of trade: assessing the role of tariff liberalization to U.S. bilateral trade 1989-2001," Globalization and Monetary Policy Institute Working Paper 71, Federal Reserve Bank of Dallas.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.