Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_7304.html
   My bibliography  Save this paper

The Not-So-Generalized Effects of the Generalized System of Preferences

Author

Listed:
  • Emanuel Ornelas
  • Marcos Ritel
Abstract
We use an empirical gravity equation approach to study how nonreciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line with existing studies, the average trade effect stemming from nonreciprocal preferences is highly unstable across specifications. However, once we allow for heterogeneous effects, results become robust and economically important. Specifically, NRTPs have a strong effect on the exports of beneficiaries when they are members of the World Trade Organization and are very poor. Not-so-poor beneficiaries also expand foreign sales, but only if they are not WTO members. For all others, the average export effects of NRTPs are mute.

Suggested Citation

  • Emanuel Ornelas & Marcos Ritel, 2018. "The Not-So-Generalized Effects of the Generalized System of Preferences," CESifo Working Paper Series 7304, CESifo.
    • Handle: RePEc:ces:ceswps:_7304
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7304.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chang, Pao-Li & Lee, Myoung-Jae, 2011. "The WTO trade effect," Journal of International Economics, Elsevier, vol. 85(1), pages 53-71, September.
    2. Mario Larch & Joschka Wanner & Yoto V. Yotov & Thomas Zylkin, 2017. "The Currency Union Effect: A PPML Re-assessment with High-Dimensional Fixed Effects," CESifo Working Paper Series 6464, CESifo.
    3. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    4. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    5. Shushanik Hakobyan, 2020. "GSP expiration and declining exports from developing countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 1132-1161, August.
    6. Shushanik Hakobyan, 2017. "Export Competitiveness of Developing Countries and US Trade Policy," The World Economy, Wiley Blackwell, vol. 40(7), pages 1405-1429, July.
    7. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    8. de Sousa, José, 2012. "The currency union effect on trade is decreasing over time," Economics Letters, Elsevier, vol. 117(3), pages 917-920.
    9. Garth Frazer & Johannes Van Biesebroeck, 2010. "Trade Growth under the African Growth and Opportunity Act," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 128-144, February.
    10. Ana Margarida Fernandes & Hibret Maemir & Aaditya Mattoo & Alejandro Forero, 2019. "Are trade preferences a panacea? The African growth and opportunity act and African exports," CESifo Working Paper Series 7672, CESifo.
    11. Fabien Forge & Jason Garred & Kyae Lim Kwon, 2021. "When are Tariff Cuts Not Enough? Heterogeneous Effects of Trade Preferences for the Least Developed Countries," Working Papers 2106E, University of Ottawa, Department of Economics.
    12. Michael Tomz & Judith L. Goldstein & Douglas Rivers, 2007. "Do We Really Know That the WTO Increases Trade? Comment," American Economic Review, American Economic Association, vol. 97(5), pages 2005-2018, December.
    13. Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
    14. Baier, Scott L. & Bergstrand, Jeffrey H. & Feng, Michael, 2014. "Economic integration agreements and the margins of international trade," Journal of International Economics, Elsevier, vol. 93(2), pages 339-350.
    15. repec:wly:soecon:v:82:4:y:2016:p:1374-1401 is not listed on IDEAS
    16. Tristan Kohl & Steven Brakman & Harry Garretsen, 2016. "Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements," The World Economy, Wiley Blackwell, vol. 39(1), pages 97-131, January.
    17. André Sapir, 1981. "Trade benefits under the EEC generalized system of preferences," ULB Institutional Repository 2013/8290, ULB -- Universite Libre de Bruxelles.
    18. Yotov, Yoto V., 2012. "A simple solution to the distance puzzle in international trade," Economics Letters, Elsevier, vol. 117(3), pages 794-798.
    19. Eicher, Theo S. & Henn, Christian, 2011. "In search of WTO trade effects: Preferential trade agreements promote trade strongly, but unevenly," Journal of International Economics, Elsevier, vol. 83(2), pages 137-153, March.
    20. Xuepeng Liu, 2009. "GATT/WTO Promotes Trade Strongly: Sample Selection and Model Specification," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 428-446, August.
    21. Larch, Mario & Monteiro, José-Antonio & Piermartini, Roberta & Yotov, Yoto, 2019. "On the Effects of GATT/WTO Membership on Trade: They are Positive and Large After All," School of Economics Working Paper Series 2019-4, LeBow College of Business, Drexel University.
    22. Ingo Borchert, 2009. "Trade diversion under selective preferential market access," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1390-1410, November.
    23. Subramanian, Arvind & Wei, Shang-Jin, 2007. "The WTO promotes trade, strongly but unevenly," Journal of International Economics, Elsevier, vol. 72(1), pages 151-175, May.
    24. Emanuel Ornelas, 2016. "Special and Differential Treatment for Developing Countries," CESifo Working Paper Series 5823, CESifo.
    25. Mario Larch & Joschka Wanner & Yoto V. Yotov & Thomas Zylkin, 2019. "Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(3), pages 487-510, June.
    26. Guimaraes, Paulo & Portugal, Pedro, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," IZA Discussion Papers 3935, Institute of Labor Economics (IZA).
    27. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2017. "The effect of nonreciprocal preferential trade agreements on benefactors’ exports," Empirical Economics, Springer, vol. 52(1), pages 143-154, February.
    28. Dai, Mian & Yotov, Yoto & Zylkin, Thomas, 2013. "On the Trade-diversion Effects of Free Trade Agreements," School of Economics Working Paper Series 2013-3, LeBow College of Business, Drexel University, revised 15 Sep 2014.
    29. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    30. Michael E. Waugh, 2010. "International Trade and Income Differences," American Economic Review, American Economic Association, vol. 100(5), pages 2093-2124, December.
    31. Sorgho, Zakaria & Tharakan, Joe, 2019. "Assessing the impact of unilateral trade policies EBA and AGOA on African beneficiaries' exports using matching econometrics," LIDAM Reprints CORE 3087, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    32. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    33. Goldstein, Judith L. & Rivers, Douglas & Tomz, Michael, 2007. "Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade," International Organization, Cambridge University Press, vol. 61(1), pages 37-67, January.
    34. Dai, Mian & Yotov, Yoto V. & Zylkin, Thomas, 2014. "On the trade-diversion effects of free trade agreements," Economics Letters, Elsevier, vol. 122(2), pages 321-325.
    35. Zakaria Sorgho & Joe Tharakan, 2019. "Assessing the impact of unilateral trade policies EBA and AGOA on African beneficiaries' exports using matching econometrics," The World Economy, Wiley Blackwell, vol. 42(10), pages 3086-3118, October.
    36. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    37. Bernard Hoekman & Çağlar Özden (ed.), 2006. "Trade Preferences and Differential Treatment of Developing Countries," Books, Edward Elgar Publishing, number 3320.
    38. Bernhard Herz & Marco Wagner, 2011. "The Dark Side of the Generalized System of Preferences," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 763-775, September.
    39. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    40. Feenstra, Robert C. & Taylor, Alan M. (ed.), 2014. "Globalization in an Age of Crisis," National Bureau of Economic Research Books, University of Chicago Press, number 9780226030753.
    41. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martínez-Serrano, José Antonio, 2014. "Do nonreciprocal preferential trade agreements increase beneficiaries' exports?," Journal of Development Economics, Elsevier, vol. 107(C), pages 291-304.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2019. "Reciprocal vs nonreciprocal trade agreements: Which have been best to promote exports?," PLOS ONE, Public Library of Science, vol. 14(2), pages 1-15, February.
    2. Ana Margarida Fernandes & Hibret Maemir & Aaditya Mattoo & Alejandro Forero, 2019. "Are trade preferences a panacea? The African growth and opportunity act and African exports," CESifo Working Paper Series 7672, CESifo.
    3. Gnangnon, Sèna Kimm, 2023. "Effects of the Utilization of Non-Reciprocal Trade Preferences Offered by QUAD Countries on Economic Growth in Beneficiary Countries," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(1), pages 33-68.
    4. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    5. Facundo Albornoz & Emanuel Ornelas & Irene Brambilla, 2020. "The Impact of Tariff Hikes on Firm Exports," Asociación Argentina de Economía Política: Working Papers 4316, Asociación Argentina de Economía Política.
    6. Maria Cipollina & Luca Salvatici, 2019. "The Trade Impact of EU Tariff Margins: An Empirical Assessment," Social Sciences, MDPI, vol. 8(9), pages 1-15, September.
    7. Gnutzmann, Hinnerk & Gnutzmann-Mkrtchyan, Arevik, 2020. "The Impact of Trade Preferences Removal," Hannover Economic Papers (HEP) dp-663, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    8. Gnangnon, Sèna Kimm, 2021. "Do Unilateral Trade Preferences Help Reduce Poverty in Beneficiary Countries?," EconStor Preprints 247346, ZBW - Leibniz Information Centre for Economics.
    9. Fernandes, Ana M. & Forero, Alejandro & Maemir, Hibret & Mattoo, Aaditya, 2023. "Are trade preferences a Panacea? The export impact of the African growth and Opportunity Act," World Development, Elsevier, vol. 162(C).
    10. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.
    11. Fabien Forge & Jason Garred & Kyae Lim Kwon, 2021. "When are Tariff Cuts Not Enough? Heterogeneous Effects of Trade Preferences for the Least Developed Countries," Working Papers 2106E, University of Ottawa, Department of Economics.
    12. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baier, Scott L. & Yotov, Yoto V. & Zylkin, Thomas, 2019. "On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration," Journal of International Economics, Elsevier, vol. 116(C), pages 206-226.
    2. Dutt, Pushan, 2020. "The WTO is not passé," European Economic Review, Elsevier, vol. 128(C).
    3. Díaz-Mora, Carmen & Esteve-Pérez, Silviano & Gil-Pareja, Salvador, 2023. "A re-assessment of the heterogeneous effect of trade agreements using intra-national trade flows," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 940-951.
    4. Magnus dos Reis & Sabino da Silva Pôrto & André Filipe Zago de Azevedo, 2021. "The impacts of the World Trade Organization on new members," The World Economy, Wiley Blackwell, vol. 44(7), pages 1944-1972, July.
    5. Yoto V. Yotov, 2022. "On the role of domestic trade flows for estimating the gravity model of trade," Contemporary Economic Policy, Western Economic Association International, vol. 40(3), pages 526-540, July.
    6. Emanuel Ornelas, 2016. "Special and Differential Treatment for Developing Countries," CESifo Working Paper Series 5823, CESifo.
    7. Mario Larch & José-Antonio Monteiro & Roberta Piermartini & Yoto V. Yotov, 2019. "On the Effects of GATT/WTO Membership on Trade: They Are Positive and Large after All," CESifo Working Paper Series 7721, CESifo.
    8. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2016. "A Re-Examination of the Effect of GATT/WTO on Trade," Open Economies Review, Springer, vol. 27(3), pages 561-584, July.
    9. Silviano Esteve-Pérez & Salvador Gil-Pareja & Rafael Llorca-Vivero & Jordi Paniagua, 2021. "Has the Euro paid off? A study of the trade-induced welfare effects of the EMU," Working Papers 2103, Department of Applied Economics II, Universidad de Valencia.
    10. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    11. Gabriel Felbermayr & Wilhelm Kohler, 2014. "WTO Membership and the Extensive Margin of World Trade: New Evidence," World Scientific Book Chapters, in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 5, pages 149-192, World Scientific Publishing Co. Pte. Ltd..
    12. David J. Kuenzel, 2019. "Do trade flows respond to nudges? Evidence from the WTO’s Trade Policy Review Mechanism," Review of International Economics, Wiley Blackwell, vol. 27(3), pages 735-764, August.
    13. Gabriel Felbermayr & Wilhelm Kohler, 2010. "Modelling the Extensive Margin of World Trade: New Evidence on GATT and WTO Membership," The World Economy, Wiley Blackwell, vol. 33(11), pages 1430-1469, November.
    14. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2019. "Reciprocal vs nonreciprocal trade agreements: Which have been best to promote exports?," PLOS ONE, Public Library of Science, vol. 14(2), pages 1-15, February.
    15. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    16. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martínez-Serrano, José Antonio, 2014. "Do nonreciprocal preferential trade agreements increase beneficiaries' exports?," Journal of Development Economics, Elsevier, vol. 107(C), pages 291-304.
    17. Samuel Admassu, 2020. "The trade creation effects of Africa’s reciprocal vis-à-vis non-reciprocal trade agreements," Empirical Economics, Springer, vol. 59(6), pages 2717-2730, December.
    18. Silviano Esteve-Pérez & Salvador Gil-Pareja & Rafael Llorca-Vivero, 2020. "Does the GATT/WTO promote trade? After all, Rose was right," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(2), pages 377-405, May.
    19. Gabriel Felbermayr & Mario Larch & Erdal Yalcin & Yoto V. Yotov, 2024. "On the heterogeneous trade and welfare effects of GATT/WTO membership," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 983-1008, August.
    20. Gabriel Felbermayr & Mario Larch & Erdal Yalcin & Yoto V. Yotov, 2024. "On the heterogeneous trade and welfare effects of GATT/WTO membership," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 983-1008, August.

    More about this item

    Keywords

    trade preferences; gravity equation; trade policy; nonreciprocity; GSP;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_7304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.