Product Standards, Harmonization, and Trade : Evidence from the Extensive Margin
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...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/11/8681816/product-standards-harmonization-trade-evidence-extensive-margin http://hdl.handle.net/10986/7606 |
| Summary: | 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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