Do standards matter for export success

By M. Chen, T. Otsuki, John O. S. Wilson. 2006

134 citations recorded by the source corpus.

Standards and technical regulations are an increasingly prominent part of the international trade policy debate. In particular, there has been considerable discussion of whether standards and regulations affect trade costs and export prospects for developing countries. In this paper the authors examine how meeting foreign standards affects firms' export performance, reflected in export propensity and market diversification. The analysis draws on the World Bank Technical Barriers to Trade Survey database of 619 firms in 17 developing countries. The results indicate that technical regulations in industrial countries adversely affect firms' propensity to export in developing countries. In particular, testing procedures and lengthy inspection procedures reduce exports by 9 percent and 3percent, respectively. Furthermore, in the model, the difference in standards across foreign countries causes diseconomy of scale for firms and affects decisions about whether to enter export markets. The empirical analysis presented here implies that standards impede exporters' market entry, reducing the likelihood of exporting to more than three markets by 7 percent. In addition, the authors find that firms that outsource components are more challenged by compliance with multiple standards.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/a74738e73986a09117069c6433a52c1cf5e7ceef

Citations in the corpus

• Help or hindrance ? the impact of harmonized standards on african exports (2007, unknown): “(2005) and Chen et al. (2006). These data represent the only developing country evidence on the economics of standards at the firm level.”
• A Product-Quality View of the Linder Hypothesis (2010, unknown): “See World Bank (1999), Maskus, Otsuki, and Wilson (2005), World Trade Organization (2005), and Chen, Otsuki, and Wilson (2006).”
• Aid-for-trade facilitation (2009, unknown): “…Freund and Weinhold (2000) on the Internet; Fink et al. (2005) on communication costs; Moenius (2000, 2004) on bilaterally shared standards and Chen et al. (2006) on meeting foreign standards, and Czubala et al. (2009) on standards in textiles, clothing, and footwear; Otsuki et al. (2001a, b)…”
• The impact of ISO 9000 diffusion on trade and FDI: A new institutional analysis (2008, unknown): “In this vein, Chen et al. (2006) empirically support that exporters concentrate on fewer foreign markets when they must comply with separate country-specific standards.”