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Assessing the Effects of EU Trade Preferences for Developing Countries

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Author Info
Persson, Maria () (Department of Economics, Lund University)
Wilhelmsson, Fredrik () (Department of Economics, Lund University)

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Abstract

Since the 1960’s, the EU has offered trade preferences to developing countries in a complex set of systems. Broadly these systems can be divided into preferences for African, Caribbean and Pacific (ACP) countries, Mediterranean preferences and the Generalised System of Preferences (GSP). We construct a detailed database over these trade preferences and use it to assess whether they have had an effect on developing countries’ exports and whether the systems have had different impact on exports. To achieve this we also estimate the effect of the successive EU enlargements on exports from developing countries. A gravity model taking into account the evolution of developing countries’ exports is estimated on a large sample of EU importers and developing country exporters over the period 1960-2002. The main findings are that certain preference systems have had large effects—the largest are found for the ACP countries, where the preferences increase exports by about 30 %, followed by Mediterranean countries—and that, countries joining the EU, ceteris paribus, import less from developing countries as they become members.

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Publisher Info
Paper provided by Lund University, Department of Economics in its series Working Papers with number 2006:4.

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Length: 27 pages
Date of creation: 14 Feb 2006
Date of revision: 26 Jun 2006
Handle: RePEc:hhs:lunewp:2006_004

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Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/
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Related research
Keywords: EU trade preferences; Trade; Developing Countries; Gravity model;

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Greenaway, David & Milner, Chris, 2002. "Regionalism and Gravity," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 574-85, December. [Downloadable!] (restricted)
  2. Peter Egger, 2004. "Estimating regional trading bloc effects with panel data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(1), pages 151-166, March. [Downloadable!] (restricted)
  3. Baldwin, R E & Murray, Tracy, 1977. "MFN Tariff Reductions and Developing Country Trade Benefits under the GSP," Economic Journal, Royal Economic Society, vol. 87(345), pages 30-46, March. [Downloadable!] (restricted)
  4. Charles Young, 1972. "Association With The Eec: Economic Aspects Of The Trade Relationship," Journal of Common Market Studies, Blackwell Publishing, vol. 11(2), pages 120-135, December. [Downloadable!] (restricted)
  5. Thierry Mayer & Soledad Zignago, 2005. "Market Access in Global and Regional Trade," Working Papers 2005-02, CEPII research center. [Downloadable!]
  6. Ianchovichina, Elena & Mattoo, Aaditya & Olarreaga, Marcelo, 2001. "Unrestricted Market Access for Sub-Saharan Africa: How Much is it Worth and Who Pays?," CEPR Discussion Papers 2820, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Oguledo, Victor Iwuagwu & MacPhee, Craig R, 1994. "Gravity Models: A Reformulation and an Application to Discriminatory Trade Arrangements," Applied Economics, Taylor and Francis Journals, vol. 26(2), pages 107-20, February.
  8. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2003. "A generalized design for bilateral trade flow models," Economics Letters, Elsevier, vol. 80(3), pages 391-397, September. [Downloadable!] (restricted)
  9. Brenton, Paul, 2003. "Integrating the least developed countries into the world trading system : the current impact of EU preferences under everything but arms," Policy Research Working Paper Series 3018, The World Bank. [Downloadable!]
  10. Nilsson, Lars, 2002. "Trading Relations: Is the Roadmap from Lome to Cotonou Correct?," Applied Economics, Taylor and Francis Journals, vol. 34(4), pages 439-52, March. [Downloadable!] (restricted)
  11. Carrere, Celine, 2006. "Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model," European Economic Review, Elsevier, vol. 50(2), pages 223-247, February. [Downloadable!] (restricted)
  12. Peridy, Nicolas, 2005. "The trade effects of the Euro-Mediterranean partnership: what are the lessons for ASEAN countries?," Journal of Asian Economics, Elsevier, vol. 16(1), pages 125-139, February. [Downloadable!] (restricted)
  13. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Blackwell Publishing, vol. 20(3), pages 363-368, 05. [Downloadable!] (restricted)
  14. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. João Correia Leite, 2008. "The Determinants of Colombian Exports: An Empirical Analysis Using the Gravity Model," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE. [Downloadable!]
  2. Elisa Gamberoni, . "Do unilateral trade preferences help export diversification? An investigation of the impact of European unilateral trade preferences on the extensive and intensive margin of trade," HEI Working Papers 17-2007, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  3. Laaksonen, Kalle & Maki-Franti, Petri & Virolainen, Meri, 2007. "Lome Convention, Agriculture and Trade Relations between the EU and the ACP Countries in 1975-2000," Working Papers 18853, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
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