The impact of preferences on developing countries’ exports to the European Union: bilateral gravity modelling at the product level

Abstract

Unilateral preferences aim at increasing exports from developing countries via reductions on applied tariffs and the incentives created by the preference margin. After decades of existence the evidence as to the extent to which preferential schemes have been genuinely effective in increasing exports is mixed. This paper evaluates the impact of the European Union's (EU) unilateral preferential regimes on the exports of developing countries using a bilateral gravity model at the product level. We use a unique dataset that allows us to determine the actual tariff rate paid by each export flow at the product level (Combined Nomenclature CN-10 digits) to the EU and the preferential regime of entry. This allows us to accurately specify the impact of each trade regime and to properly address the issue of utilisation and non-utilisation of trade preferences. The most important findings of the paper are that unilateral preferences have been effective in increasing exports to the EU both as a result of the direct effect of lower tariffs and positive preference margin, and because of secondary effects associated with the preference regimes; although the outcome of these secondary effects depends on the margin of trade considered.

Revisiting the Trade Impact of the African Growth and Opportunity Act: A Synthetic Control Approach

“…Because, average effects of PTAs may be hiding cross-country heterogeneity or variations across time, Figure 3 presents a comparable measure -the average treatment effect of AGOA for all eligible countries included in the study. The significantly large trade creation impacts suggest that the results are in line with previous studies such as Mattoo et al (2003); Frazer and Van Biesebroeck (2010); Cirera et al (2016). While these studies mostly fail to reveal the heterogeneity across countries that is predominant, results are similar to earlier studies that find a significantly large positive impact of AGOA.…”

“…With the exception of a few studies, mainly Frazer and Van Biesebroeck (2010), almost all (See Anderson and Van Wincoop, 2003;Rose, 2004;Brenton and Hoppe, 2006;Cipollina and Salvatici, 2010a;Aiello et al, 2010;Gil-Pareja et al, 2014;Cirera et al, 2016) employ augmented versions of gravity models of trade to identify the impact of PTAs on trade flows. However, findings that rely on the empirical gravity equation for estimation may be subject to various estimation problems.…”

“…The gravity model has been the workhorse framework to analyze the impact of PTAs on trade (e.g. See Anderson and Van Wincoop, 2003;Brenton and Hoppe, 2006;Cipollina and Salvatici, 2010a;Aiello et al, 2010;Gil-Pareja et al, 2014;Cirera et al, 2016). The predominant empirical literature in the study of the impact of PTAs on trade or exports augments the traditional gravity model with a dummy variable representing participation in a particular PTA.…”

Assessing the impact of unilateral trade policies EBA and AGOA on African beneficiaries' exports using matching econometrics

“…Some papers on AGOA indicate that the US preferential policy impacts trade flows positively (Cipollina, Laborde, Salvatici, and ; Cirera, Foliano, & Gasiorek, ; Frazer & Van Biesebroeck, ; Tadesse & Fayissa, ), while others find mixed evidence or suggest the converse (Aiello, Cardamone, & Agostino, ; Aiello & Demaria, ; Brenton & Hoppe, ; Cook & Jones, ; Zappile, ). For instance, Zappile () finds no significant trade effect of AGOA on eligible countries' exports, while Frazer and Van Biesebroeck () confirm an impact of AGOA on beneficiaries' countries.…”

Kajian Dampak Kebijakan United States Generalized System of Preference (Us-Gsp) 2015 Terhadap Ekspor Produk Perikanan Indonesia Ke Usa

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