Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96573
Authors: 
Clougherty, Joseph A.
Grajek, Michał
Year of Publication: 
2009
Series/Report no.: 
ESMT Working Paper 09-006
Abstract: 
International standards have the potential to both promote and hinder international trade. Yet empirical scholarship on the standards-trade relationship has been held up due to some methodological challenges: measurement problems, varied effects, and endogeneity concerns. We are able to surmount these challenges while considering the impact of one particular standard on the country-pair trade flows between 91 nations over the 1995-2005 period. To deal with these challenges, we measure the degree of standardization via the penetration of ISO 9000 in individual nations, allow ISO diffusion to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) effects, and use instrumental variable and panel data techniques to overcome endogeneity concerns. We find strong evidence in support of ISO 9000 involving a common-language effect that enhances country-pair trade; yet, the evidence is more mixed with regard to the quality-signaling and information/compliance-cost effects. While we find ISO-rich nations (most notably European) to clearly benefit from the worldwide diffusion of standardization, ISO 9000 represents a de facto trade barrier for nations (e.g., the US and Mexico) lagging behind in terms of adoption.
Subjects: 
international trade
standards
technical trade barriers
ISO 9000
networks
JEL: 
F13
L15
C51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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