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ISO 9000: New form of protectionism or common language in international trade?

Author

Listed:
  • Joseph A. Clougherty

    (ESMT European School of Management and Technology)

  • Michal Grajek

    (ESMT European School of Management and Technology)

Abstract

International standards have the potential to both promote and hinder international trade. Yet empirical scholarship on the standards-trade relationship has been held up due to some methodological challenges: measurement problems, varied effects, and endogeneity concerns. We are able to surmount these challenges while considering the impact of one particular standard on the country-pair trade flows between 91 nations over the 1995-2005 period. To deal with these challenges, we measure the degree of standardization via the penetration of ISO 9000 in individual nations, allow ISO diffusion to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) effects, and use instrumental variable and panel data techniques to overcome endogeneity concerns. We find strong evidence in support of ISO 9000 involving a common-language effect that enhances country-pair trade; yet, the evidence is more mixed with regard to the quality-signaling and information/compliance-cost effects. While we find ISO-rich nations (most notably European) to clearly benefit from the worldwide diffusion of standardization, ISO 9000 represents a de facto trade barrier for nations (e.g., the US and Mexico) lagging behind in terms of adoption.

Suggested Citation

  • Joseph A. Clougherty & Michal Grajek, 2009. "ISO 9000: New form of protectionism or common language in international trade?," ESMT Research Working Papers ESMT-09-006, ESMT European School of Management and Technology.
  • Handle: RePEc:esm:wpaper:esmt-09-006
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    References listed on IDEAS

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    Cited by:

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    2. Susanne Fricke & Geoffrey Chapman, 2017. "The Role of Standards in North-South Trade: The Case of Agricultural Exports from Sub-Saharan African Countries to the EU," Jena Economic Research Papers 2017-011, Friedrich-Schiller-University Jena.
    3. Goedhuys, Micheline & Sleuwaegen, Leo, 2013. "The Impact of International Standards Certification on the Performance of Firms in Less Developed Countries," World Development, Elsevier, vol. 47(C), pages 87-101.

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    More about this item

    Keywords

    international trade; standards; technical trade barriers; ISO 9000; networks;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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