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International Trade in rough diamonds and the Kimberley Process Certification Scheme

Author

Listed:
  • Stefan Borsky

    (University of Graz)

  • Andrea Leiter

    (University of Innsbruck)

Abstract
In 2003, the Kimberley Process Certification Scheme (KPCS) went into force to stop the trade in those diamonds, directly linked to the fueling of armed conflict and activities of rebel movements, also known as conflict diamonds. This article gives empirical evidence on the impact of the KPCS on international trade in rough diamonds. We find that bilateral KPCS participation facilitates access to international markets for rough diamonds and increases trade values. The bilateral trade impact of the KPCS does not depend on the exporters' economic development nor the extent of market access. A more detailed analysis of exporters' heterogeneity in trade values shows that unilaterally KPCS intensifies the trade impediments resulting from armed conflicts and, thereby, reduces the scale of potential conflict diamonds traded internationally. We further offer evidence that the KPCS-induced trade effects apply not only to exporter- or importer-hubs but equally to smaller trade partners. Our analysis gives insights into how agreements setting a particular standard may affect international trade patterns in conflict minerals.

Suggested Citation

  • Stefan Borsky & Andrea Leiter, 2021. "International Trade in rough diamonds and the Kimberley Process Certification Scheme," Graz Economics Papers 2021-02, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2021-02
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    References listed on IDEAS

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    More about this item

    Keywords

    International product standards; conflict diamonds; international trade; gravity model.;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q37 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Issues in International Trade
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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