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Assessing the price-raising effect of non-tariff measures in Africa

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  • Olivier Cadot
  • Julien Gourdon

Abstract

In spite of widespread tariff reductions, intra-African borders remain thick. Regional trade is inhibited by inadequate transportation infrastructure, but also by various government-imposed measures. This paper combines price data from the World Bank’s International Comparison Project (ICP) with the new TRAINS database on non-tariff measures (NTMs) to estimate their effect on consumer prices for selected consumption products. Results based on panel regressions on 1260 country-product pairs suggest that, after controlling for tariffs, systematic cross-country cost-of-living differences, and product-specific unobservables, SPS measures contribute to raise the price of African foodstuffs by 14%. At the product level, rice and other cereals, some types of meat (e.g. poultry), and edible oils tend to fetch high AVEs. Combining our estimates with data on household expenditure patterns from Kenya’s household survey, we show that the effect is regressive, raising the cost of living by 9% for poor households.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2012-16.

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Date of creation: Aug 2012
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Handle: RePEc:cii:cepidt:2012-16

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Keywords: Ad-valorem equivalent; Price-raising impact of non tariff measures; Africa;

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  1. Robert E. Baldwin, 1989. "Measuring Nontariff Trade Policies," NBER Working Papers 2978, National Bureau of Economic Research, Inc.
  2. Mahbub Morshed, A. K. M., 2003. "What can we learn from a large border effect in developing countries?," Journal of Development Economics, Elsevier, vol. 72(1), pages 353-369, October.
  3. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating Trade Restrictiveness Indices," CEPR Discussion Papers 5576, C.E.P.R. Discussion Papers.
  4. Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan & van Tongeren, Frank, 2011. "Measuring Costs And Benefits Of Non-Tariff Measures In Agri-Food Trade," Staff General Research Papers 32393, Iowa State University, Department of Economics.
  5. Scott Bradford, 2003. "Paying the Price: Final Goods Protection in OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 24-37, February.
  6. Robert E. Baldwin, 1975. "Appendices to "Foreign Trade Regimes and Economic Development: Philippines"," NBER Chapters, in: Foreign Trade Regimes and Economic Development: Philippines, pages 157-160 National Bureau of Economic Research, Inc.
  7. Michael Ferrantino, 2006. "Quantifying the Trade and Economic Effects of Non-Tariff Measures," OECD Trade Policy Papers 28, OECD Publishing.
  8. Andriamananjara, Soamiely & Dean, Judith M. & Feinberg, Robert & Ferrantino, Michael J. & Ludema, Rodney & Tsigas, Marinos E., 2004. "The Effects of Non-Tariff Measures on Prices, Trade, and Welfare: CGE Implementation of Policy-Based Price Comparisons," Working Papers 15863, United States International Trade Commission, Office of Economics.
  9. Ihle, Rico & von Cramon-Taubadel, Stephan & Zorya, Sergiy, 2010. "Country and border effects in the transmission of maize prices in Eastern Africa: evidence from a semi-parametric regression model," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96184, African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA).
  10. Robert E. Baldwin, 1975. "Foreign Trade Regimes and Economic Development: Philippines," NBER Books, National Bureau of Economic Research, Inc, number bald75-1, October.
  11. Disdier, Anne-Celia & Fontagne, Lionel & Mimouni, Mondher, 2008. "AJAE Appendix: The Impact of Regulations on Agricultural Trade: Evidence from the SPS and TBT Agreements," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(2), May.
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