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Product standards, harmonization, and trade : evidence from the extensive margin

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  • Shepherd, Ben

Abstract

The author uses a new database of EU product standards in the textiles, clothing, and footwear sectors to present the first empirical evidence that international standards harmonization is associated with increased partner country export variety. A 10 percentage point increase in the proportion of internationally harmonized standards is associated with a 0.2 percent increase in partner country export variety, whereas a 10 percent increase in the total number of standards is associated with a nearly 6 percent decrease in product variety. Although small, the harmonization elasticity is statistically significant, and proves highly robust to sample changes and instrumental variables estimation using instruments motivated by political economy considerations. Moreover, it is found to be around 50 percent higher for low income countries, which suggests that they may be particularly constrained in adapting products to meet multiple standards. Numerical simulations show that these findings are consistent with a heterogeneous firms model of trade in which harmonization is beneficial at the extensive margin provided that any increases in compliance costs are not too large.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4390.

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Date of creation: 01 Nov 2007
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Handle: RePEc:wbk:wbrwps:4390

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Related research

Keywords: Housing&Human Habitats; E-Finance and E-Security; Educational Technology and Distance Education; Mining&Extractive Industry (Non-Energy); E-Business;

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Cited by:
  1. De, Prabir & Raihan, Selim & Kathuria, Sanjay, 2012. "Unlocking Bangladesh-India trade : emerging potential and the way forward," Policy Research Working Paper Series 6155, The World Bank.
  2. Mukim, Megha, 2012. "Geography and exporting behavior : evidence from India," Policy Research Working Paper Series 5979, The World Bank.
  3. Munasib, Abdul B.A. & Roy, Devesh, 2011. "Nontariff Barriers as Bridge to Cross," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125025, International Association of Agricultural Economists.
  4. Borchert, Ingo & Gootiiz, Batshur & Mattoo, Aaditya, 2012. "Policy barriers to international trade in services : evidence from a new database," Policy Research Working Paper Series 6109, The World Bank.
  5. Reyes, Jose-Daniel, 2011. "International harmonization of product standards and firm heterogeneity in international trade," Policy Research Working Paper Series 5677, The World Bank.
  6. Munasib, Abdul & Roy, Devesh, 2011. "Sanitary and phytosanitary standards as bridge to cross:," IFPRI discussion papers 1140, International Food Policy Research Institute (IFPRI).
  7. Olper, Alessandro & Curzi, Daniele & Pacca, Lucia, 2014. "Do food standards affect the quality of EU imports?," Economics Letters, Elsevier, vol. 122(2), pages 233-237.

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