Preference erosion and the developing countries exports to the EU: a dynamic panel gravity approach
AbstractThe erosion of preferences due to multilateral tariff reductions is a long-standing concern for many developing countries. This paper focuses on the erosion of the preferences granted by the EU in the rice industry. Since 2004 there has been a sharp decrease in border protection for the EU rice industry. Because the EU grants trade preferences to a considerable number of rice exporting developing countries, the reform implied preference erosion as well. By addressing the impact of preference erosion on developing countries rice exports to the EU, this paper contributes two original insights to the literature: first, by proposing a new empirical approach to compute the preference margin when tariff rate quotas are in force which is based on the assumption of the existence of fixed costs and economies of scale in international trade; second, by estimating the trade elasticities of preferences by means of a dynamic panel gravity equation to deal with the issues of endogeneity of preferences and persistency in bilateral trade flows. The results show that the way preference margins are calculated matters significantly when assessing the existence and extent of their erosion and the values of trade elasticities. Finally, the estimations highlight the fact that the impact of preferences is still very strong for some of the countries concerned. Copyright Kiel Institute 2012
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Bibliographic InfoArticle provided by Springer in its journal Review of World Economics.
Volume (Year): 148 (2012)
Issue (Month): 4 (December)
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Other versions of this item:
- Raimondi, Valentina & Scoppola, Margherita & Olper, Alessandro, 2011. "Preference erosion and the developing countries exports to the EU: a dynamic panel gravity approach," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103391, Agricultural and Applied Economics Association.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
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