The Perversity of Preferences : The Generalized System of Preferences and Developing Country Trade Policies, 1976-2000

Industrial countries maintain special tariff preferences, namely the Generalized System of Preferences (GSP), for imports from developing countries. Critics have highlighted the underachieving nature of such preferences, but developing countries continue to place the GSP at the heart of their agenda in multilateral negotiations. What effect do such preferences have on a recipient's own trade policies? The authors develop and test a simple theoretical model of a small country's trade policy choice, using a dataset of 154 developing countries from 1976 through 2000. They find that countries removed from the GSP adopt more liberal trade policies than those remaining eligible. The results, corrected for endogeneity and robust to numerous alternative measures of trade policy, suggest that developing countries may be best served by full integration into the reciprocity-based world trade regime rather than continued GSP-style special preferences.

Bibliographic Details

Main Authors:	Ozden, Caglar, Reinhardt, Eric
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2003-01
Subjects:	AGRICULTURAL PRODUCTS, ANNUAL OBSERVATIONS, AVERAGE TARIFFS, BARRIERS TO IMPORTS, BUSINESS CYCLE, CARTEL, COMPARATIVE ADVANTAGE, COMPETITIVE ADVANTAGE, CONDITIONALITY, CONSUMERS, COUNTRY EXPORTERS, COUNTRY IMPORTS, CUSTOMS, DEVELOPED COUNTRIES, DEVELOPMENT, DEVELOPMENT POLICIES, DOMESTIC DEMAND, DOMESTIC FIRMS, DOMESTIC MARKET, DUTY-FREE ACCESS, ECONOMETRIC MODELS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, EMPIRICAL STUDIES, EQUILIBRIUM, EXCESS SUPPLY, EXPORT EARNINGS, EXPORT GOODS, EXPORT INDUSTRIES, EXPORT MARKET, EXPORT PERFORMANCE, EXPORT PRICES, EXPORT SECTOR, EXPORT SECTORS, EXPORTERS, EXPORTS, FINANCIAL CRISES, FOREIGN MARKET, FREE ACCESS, FREE TRADE, FREER TRADE, GDP, GENERAL EQUILIBRIUM MODEL, GENERALIZED SYSTEM OF PREFERENCES, GLOBAL TRADE, GRAVITY MODEL, HUMAN RIGHTS, IMPORT BARRIERS, IMPORT POLICIES, IMPORT PRICES, IMPORT SUBSTITUTION, IMPORT- COMPETING SECTOR, IMPORT-COMPETING PRODUCERS, IMPORTS, INCOME, INCREASING TRADE, INDUSTRIALIZATION, INEFFICIENCY, INTELLECTUAL PROPERTY, INTERNATIONAL INSTITUTIONS, INTERNATIONAL TRADE, LIBERAL TRADE POLICY, MARGINAL COST, MARGINAL EFFECT, MARKET SIZE, MFN TARIFFS, MULTILATERAL NEGOTIATIONS, MULTILATERAL TRADE, MULTILATERAL TRADE NEGOTIATIONS, OIL, OPEC, PER CAPITA INCOME, POLITICAL ECONOMY, PREFERENCE SCHEMES, PREFERENTIAL ACCESS, PREFERENTIAL MARKET ACCESS, PREFERENTIAL STATUS, PRODUCERS, PRODUCT LEVEL, PROTECTION LEVELS, PROTECTIONISM, PROTECTIONIST POLICIES, PROTECTIONIST PRESSURES, REAL GDP, RECIPROCITY, RULES OF ORIGIN, STANDARD ERRORS, SUNK COSTS, TARIFF BARRIERS, TARIFF LINES, TARIFF PREFERENCES, TARIFF PROTECTION, TARIFF RATE, TARIFF RATES, TARIFF REDUCTIONS, TARIFF REVENUE, TERMS OF TRADE, TRADE, TRADE BARRIERS, TRADE CONCESSIONS, TRADE DIVERSION, TRADE EXTERNALITIES, TRADE FLOWS, TRADE LIBERALIZATION, TRADE LIBERALIZATION EFFORTS, TRADE NEGOTIATIONS, TRADE OPENNESS, TRADE PARTNERS, TRADE POLICIES, TRADE POLICY, TRADE PREFERENCES, TRADE PROTECTION, TRADE REGIME, TRADE REGIMES, TRADE UNIT, TRADE VOLUME, TRADING PARTNERS, TRADING REGIME, TRANSPORT COSTS, UNILATERAL LIBERALIZATION, WORLD ECONOMY, WORLD PRICE, WORLD PRICES, WORLD TRADE, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2003/01/2120331/perversity-preferences-gsp-developing-country-trade-policies-1976-2000 http://hdl.handle.net/10986/19170
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