The impact of trade preferences on exports of developing countries: the case of the AGOA and CBI preferences of the USA

Abstract

In this paper we study the impact of AGOA and CBTPA preferences on Sub-Saharan Africa and Caribbean Basin beneficiaries respectively. The identification of the impact consists of modelling the selection in exporting that occurs and accounting for the zero trade occurring at the HS-6 digit level of disaggregation used in the paper. The AGOA impact has in the literature been found to be driven mainly by apparel and textiles and oil and energy related products. We find evidence corroborating this, we do also find a strong impact of the AGOA and CBTPA preferences for the beneficiary countries in non apparel and textile products. Another result is that the strength of the estimated impact in several cases increases with the level of product aggregation. Finally, not controlling for zero trade flows and the choice of panel data estimator significantly biases the estimated impact. A large sample size as in our case in most cases attenuates this bias and increases consistency