Technical regulations and specialization in international trade

Abstract

It is widely acknowledged that while technical regulations can improve welfare and facilitate markets, they can also impede trade. The trade impeding effects of technical regulations are especially worrisome for developing countries: they frequently lack the human and capital resources necessary to satisfy technical measures, and thus are more likely to be excluded from markets by technical measures. This paper uses highly disaggregated US data on agricultural, mining and manufacturing imports to examine the impact of technical regulations on trade patterns. Using instrumental variables estimation to correct for the potential endogeneity of technical regulations, the analysis suggests that technical regulations substantially impinge on poor countries' exports: their weaker capacities to satisfy technical regulations lead them to specialize away from industries with heavier regulatory burdens.International trade Technical regulations Comparative advantage Developing countries Non-tariff barriers F13 O24 O19