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Do standards matter for export success ?

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  • Chen, Maggie Xiaoyang
  • Otsuki, Tsunehiro
  • Wilson, John S.

Abstract

Standards and technical regulations are an increasingly prominent part of the international trade policy debate. In particular, there has been considerable discussion of whether standards and regulations affect trade costs and export prospects for developing countries. In this paper the authors examine how meeting foreign standards affects firms'export performance, reflected in export propensity and market diversification. The analysis draws on the World Bank Technical Barriers to Trade Survey database of 619 firms in 17 developing countries. The results indicate that technical regulations in industrial countries adversely affect firms'propensity to export in developing countries. In particular, testing procedures and lengthy inspection procedures reduce exports by 9 percent and 3percent, respectively. Furthermore, in the model, the difference in standards across foreign countries causes diseconomy of scale for firms and affects decisions about whether to enter export markets. The empirical analysis presented here implies that standards impede exporters'market entry, reducing the likelihood of exporting to more than three markets by 7 percent. In addition, the authors find that firms that outsource components are more challenged by compliance with multiple standards.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3809.

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Date of creation: 01 Jan 2006
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Handle: RePEc:wbk:wbrwps:3809

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Keywords: Markets and Market Access; Small Scale Enterprise; Microfinance; Economic Theory&Research; Public Sector Regulation;

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References

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  1. Brian Aitken & Gordon H. Hanson & Ann E. Harrison, 1994. "Spillovers, Foreign Investment, and Export Behavior," NBER Working Papers 4967, National Bureau of Economic Research, Inc.
  2. Ronald Fischer & Pablo Serra, 1998. "Standards and Protection," Documentos de Trabajo, Centro de Economía Aplicada, Universidad de Chile 45, Centro de Economía Aplicada, Universidad de Chile.
  3. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2004. "Dissecting trade: firms, industries, and export destinations," Staff Report, Federal Reserve Bank of Minneapolis 332, Federal Reserve Bank of Minneapolis.
  4. Swann, Peter & Temple, Paul & Shurmer, Mark, 1996. "Standards and Trade Performance: The UK Experience," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(438), pages 1297-1313, September.
  5. Maskus, Keith E. & Otsuki, Tsunehiro & Wilson, John S., 2005. "The cost of compliance with product standards for firms in developing countries: an econometric study," Policy Research Working Paper Series 3590, The World Bank.
  6. Mattias Ganslandt & James R. Markusen, 2001. "Standards and Related Regulations in International Trade: A Modeling Approach," NBER Working Papers 8346, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Henson, Spencer & Masakure, Oliver & Cranfield, John, 2011. "Do Fresh Produce Exporters in Sub-Saharan Africa Benefit from GlobalGAP Certification?," World Development, Elsevier, Elsevier, vol. 39(3), pages 375-386, March.
  2. Clougherty, Joseph A & Grajek, Michal, 2006. "The Impact of ISO 9000 Diffusion on Trade and FDI: A New Institutional Analysis," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6026, C.E.P.R. Discussion Papers.
  3. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2008. "Productivity, quality and exporting behavior under minimum quality constraints," MPRA Paper 24146, University Library of Munich, Germany.
  4. Tarasov, Alexander, 2008. "Per Capita Income, Market Access Costs, and Trade Volumes," MPRA Paper 19989, University Library of Munich, Germany, revised Dec 2009.
  5. Agyei-Sasu, Felix & Egyir, Irene Susana, 2010. "Tobit Estimation Of The Intensity Of Export Success Of Horticultural Enterprises In Ghana," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Afri 97071, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
  6. Lionel Gérard Fontagné & Gianluca Orefice & Roberta Piermartini & Nadia Rocha, 2013. "Product Standards and Margins of Trade: Firm Level Evidence," CESifo Working Paper Series 4169, CESifo Group Munich.
  7. Cristina Grazia & Abdelhakim Hammoudi & Oualid Hamza, 2012. "Sanitary and phytosanitary standards: Does consumers’ health protection justify developing countries’ producers’ exclusion?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, INRA Department of Economics, vol. 93(2), pages 145-170.
  8. Matthias Helble & Catherine Mann & John Wilson, 2012. "Aid-for-trade facilitation," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 148(2), pages 357-376, June.
  9. Juan Carlos Hallak, 2006. "A Product-Quality View of the Linder Hypothesis," NBER Working Papers 12712, National Bureau of Economic Research, Inc.
  10. Schuster, Monica & Maertens, Miet, 2012. "Private Food Standards and Firm-Level Trade Effects: A Dynamic Analysis of the Peruvian Asparagus Export Sector," Working Papers, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics 146521, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
  11. Kebede, Sindu & Fekadu, Belay & Aredo, Dejene, 2011. "Trade Liberalization and Poverty: A Macro-Micro Analysis in Ethiopia," Proceedings of the German Development Economics Conference, Berlin 2011 44, Verein für Socialpolitik, Research Committee Development Economics.
  12. Itzhak Goldberg & John Gabriel Goddard & Smita Kuriakose & Jean-Louis Racine, 2011. "Igniting Innovation : Rethinking the Role of Government in Emerging Europe and Central Asia," World Bank Publications, The World Bank, number 2358, August.
  13. J. Luis Guasch & Jean-Louis Racine & Isabel Sánchez & Makhtar Diop, 2007. "Quality Systems and Standards for a Competitive Edge," World Bank Publications, The World Bank, number 6768, August.
  14. Itzhak Goldberg & Lee Branstetter & John Gabriel Goddard & Smita Kuriakose, 2008. "Globalization and Ttechnology Absorption in Europe and Central Asia : The Role of Trade, FDI, and Cross-Border Knowledge Flows," World Bank Publications, The World Bank, number 6445, August.
  15. Tomás Castagnino, 2011. "What Drives firms´ Geographic Diversification in International Markets?," BCRA Working Paper Series 201152, Central Bank of Argentina, Economic Research Department.
  16. Cristina Grazia & Abdelhakim Hammoudi & Oualid Hamza, 2012. "Sanitary and phytosanitary standards: Does consumers’ health protection justify developing countries’ producers’ exclusion?," Working Papers 167021, Institut National de la Recherche Agronomique, France.

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