Do Standards Matter for Export Success?

26 Pages Posted: 17 Jan 2006

See all articles by Maggie Xiaoyang Chen

Maggie Xiaoyang Chen

George Washington University; George Washington University

Tsunehiro Otsuki

Osaka University - Osaka School of International Public Policy (OSIPP)

John S. Wilson

World Bank - Development Research Group (DECRG)

Date Written: January 2006

Abstract

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.

Suggested Citation

Chen, Maggie Xiaoyang and Chen, Maggie Xiaoyang and Otsuki, Tsunehiro and Wilson, John S., Do Standards Matter for Export Success? (January 2006). World Bank Policy Research Working Paper No. 3809, Available at SSRN: https://ssrn.com/abstract=875656

Maggie Xiaoyang Chen (Contact Author)

George Washington University ( email )

Department of Economics, George Washington Univ.
1922 F Street, Suite 208, NW
Washington, DC 20052
United States
(202) 994-0192 (Phone)
(202) 994-6147 (Fax)

HOME PAGE: http://home.gwu.edu/~xchen

George Washington University ( email )

Department of Economics, George Washington Univ.
1922 F Street, Suite 208, NW
Washington, DC 20052
United States
(202) 994-0192 (Phone)
(202) 994-6147 (Fax)

HOME PAGE: http://home.gwu.edu/~xchen

Tsunehiro Otsuki

Osaka University - Osaka School of International Public Policy (OSIPP) ( email )

1-31, Machikaneyama
Toyonaka, Osaka 560-0043
Japan

John S. Wilson

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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