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Trade and Welfare Effects of Standards in Agricultural Markets

dc.contributor.advisorBrümmer, Bernhard Prof. Dr.
dc.contributor.authorFiankor, Dela-Dem Doe
dc.titleTrade and Welfare Effects of Standards in Agricultural Marketsde
dc.contributor.refereeBrümmer, Bernhard Prof. Dr.
dc.description.abstractengIntegrating developing countries (DCs) into the global trading system is key to their economic development. To that effect, several rounds of trade negotiations have reduced tariffs to a historic low. Despite this remarkable feat, international trade is still far from free as non-tariff measures (NTMs)—i.e., policies aside tariffs that can affect trade, e.g., standards—have proliferated. In many markets, export success is now conditional on compliance with NTMs. Thus, tariff liberalisation and reductions in global logistic charges have not improved the integration, especially of DCs, into global value chains. Yet, our knowledge of the NTM–trade relationship is nuanced. This has implications for evidence-based trade policy-making. On this premise, this thesis contributes three essays that assess the implications of standards for trade, and welfare via the channels of prices, varieties and quality upgrading in the agrifood sector. The development implication of this dissertation is obvious; the agrifood sector is particularly subject to standards but forms a major share of exports in many DCs. In global agricultural value chains, private food standards have proliferated. While they are de jure voluntary, compliance is fast becoming de facto mandatory. This has cost implications, especially for smallholder DC farmers. But, does voluntary certification guarantee market access? The first essay contributes the first multi-product/country study that examines the effects of GlobalGAP on global agrifood trade. We estimate a structural gravity model using a dataset of certified producers and the share of certified land area in total harvest area. While our results confirm GlobalGAP standards as catalysts to trade, we find that the trade-enhancing effect varies across products and destination markets. Voluntary certification poses extra costs for producers but sustains market access.  It is a well-known fact that institutional differences across countries affect bilateral trade. Trade is sensitive to the quality of contractual institutions. For DCs, this supply-side constraint further hinders their inclusion in the global trading system. The second essay asks the crucial question; how do countries enhance trade when institutional differences exist? Using a sample of EU/EFTA imports, we study how adopting GlobalGAP standards modify the effect of governance distance — measured as the degree to which governance and institutions differ between countries — on exports. We find that while increasing governance distance hinders bilateral trade, GlobalGAP certified countries see their trade-inhibiting effects reduced by about 50%. Put differently, when institutional quality differs between countries, we show that standards can act as substitute governance institutions. Finally, chemical use is important in agriculture to protect crops and enhance yields. But, depending on exposure levels, chemicals pose health risks. Thus, cross-country differences in chemical-related regulations will influence supply chain structures. The third essay assesses how this regulatory heterogeneity affects trade, product prices and quality upgrading. Exploiting the bilateral difference in maximum residue limits overtime for 145 agrifood products across 59 countries, we show that differences in public regulations are trade-restrictive. However, conditional on trading, they increase product prices and quality-adjusted prices but have null effects on estimated product quality. Food safety standards are here to stay; as non-tariff measures, they are not necessarily nontariff barriers. This dissertation shows that by harmonising global standards, retailer-driven private standards enhance trade. But if standards vary substantially across countries, as is the case for public mandatory standards, they reduce trade and induce welfare
dc.contributor.coRefereeMartínez-Zarzoso, Inmaculada Prof. Dr.
dc.contributor.thirdRefereevon Cramon-Taubadel, Stephan Prof. Dr.
dc.subject.engAgricultural tradede
dc.subject.engFood safety standardsde
dc.subject.engInstitutional qualityde
dc.subject.engMaximum residue limitsde
dc.subject.engStructural gravity modelsde
dc.subject.engProduct qualityde
dc.subject.engEmpirical trade analysisde
dc.subject.engGlobalGAP certificationde
dc.subject.engNon-Tariff Measuresde
dc.affiliation.instituteFakultät für Agrarwissenschaftende
dc.subject.gokfullLand- und Forstwirtschaft (PPN621302791)de

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