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Quality Regulation Creates and Reallocates Trade

Author

Listed:
  • Zavala, Lucas
  • Fernandes, Ana Margarida
  • Haygood, Ryan
  • Reed, Tristan
  • Reyes, Daniel

Abstract

Quality regulations imposing minimum product standards have become a central instrument of trade policy. Using disaggregated panel data from middle-income countries, the authors show that sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) measures increase trade on average, consistent with improved consumer information and contrary to their depiction as “non-tariff barriers”. However, their distributional effects differ. SPS measures reallocate trade toward higher-income countries, whereas TBT measures favor lower-income countries. Both increase sales concentration among exporters from lower-income countries only. The evidence indicates that the costs of quality regulation are primarily borne by exporting firms, especially those from lower-income countries.

Suggested Citation

  • Zavala, Lucas & Fernandes, Ana Margarida & Haygood, Ryan & Reed, Tristan & Reyes, Daniel, 2023. "Quality Regulation Creates and Reallocates Trade," Policy Research Working Paper Series 10601, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10601
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    References listed on IDEAS

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    1. Sutton, John, 2012. "Competing in Capabilities: The Globalization Process," OUP Catalogue, Oxford University Press, number 9780199274536.
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    Cited by:

    1. Rosenow,Samuel Kaspar, 2024. "Barrier or Opportunity ? How Trade Regulations Shape Colombian Firms’ Export Strategies," Policy Research Working Paper Series 10795, The World Bank.

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