How Do Technical Barriers to Trade Influence Trade?

16 Pages Posted: 24 Aug 2012

See all articles by Xiaohua Bao

Xiaohua Bao

Shanghai University of Finance and Economics

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

Date Written: September 2012

Abstract

This paper empirically estimates the trade effects of technical barriers to trade (TBT) based on all TBT notifications from 105 World Trade Organization (WTO) countries during 1995–2008. The paper adopts a modified two‐stage gravity model to control for both sample selection bias and firm heterogeneity bias. It was found that a country's TBT notifications decrease other countries' probability of exporting, but increase their export volumes. The result can be explained by the TBT's differential effects on the fixed and variable cost of export, and consumer confidence. It was further found that (i) a developing country's TBT have significant effects on other developing countries' exports, but no significant effects on the developed countries' exports, (ii) a developed country's TBT have significant effects on the exports from both types of countries, and (iii) exports from developed countries are affected by a developed country's TBT more seriously than a developing country's TBT.

Suggested Citation

Bao, Xiaohua and Qiu, Larry Dongxiao, How Do Technical Barriers to Trade Influence Trade? (September 2012). Review of International Economics, Vol. 20, Issue 4, pp. 691-706, 2012. Available at SSRN: https://ssrn.com/abstract=2135363 or http://dx.doi.org/10.1111/j.1467-9396.2012.01047.x

Xiaohua Bao (Contact Author)

Shanghai University of Finance and Economics

Larry Dongxiao Qiu

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

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