Private Food Standards and Firm-Level Trade Effects: A Dynamic Analysis of the Peruvian Asparagus Export Sector
Private standards are increasingly governing international food trade, but little is known about the implications for developing countries. The objective of the study is to provide evidence in the ongoing debate on standards as barrier or catalyst for developing countries’ export. We use the Peruvian fresh asparagus export sector as a case study and provide empirical panel data evidence on the effects of certification to private food standards on export volumes of firms. Our dataset on the transactions of 567 export firms from 1993 to 2011 allows us to take export dynamics and time trends into account, as well as to keep country and sector specific effects constant. In our empirical strategy, we first use simple OLS and ignore firm-specific unobservable effects and dynamic export patterns. We then account for export persistence, as well as company fixed effects and finally, use System-GMM estimators to address potential reversed causality issues. These approaches represent substantial methodological improvements compared with previous studies on the trade effects of private standards. The empirical innovation is crucial for accurate impact estimation, as results indicate that certification to standards has a positive effect on the export volumes of companies, but that the significant effect dwindles as soon as unobserved firm heterogeneity and export persistency are properly controlled for. Additional studies with large data availabilities are needed to further disentangle the effect and confirm the case study results.
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