Working Paper: NBER ID: w18132
Authors: Joseph A. Clougherty; Michal Grajek
Abstract: Empirical scholarship on the standards-trade relationship has been held up due to methodological challenges: measurement, varied effects, and endogeneity. Considering the trade-effects of one particular standard (ISO 9000), we surmount methodological challenges by measuring standardization via national penetration of ISO 9000, allowing standardization to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) channels, and using instrumental variable, multilateral resistance and panel data techniques to overcome endogeneity. We find evidence of common-language and quality-signaling augmenting country-pair trade. Yet, ISO-rich nations (most notably European) benefit the most from standardization, while ISO-poor nations find ISO 9000 to represent a trade barrier due to compliance-cost effects.
Keywords: ISO 9000; international trade; standards; endogeneity; compliance costs; quality signaling
JEL Codes: C51; F13; L15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ISO 9000 diffusion in the home nation (L15) | exports (F10) |
| ISO 9000 diffusion in the host nation (L15) | exports (F10) |
| Home nation ISO 9000 diffusion + Host nation ISO 9000 diffusion (F29) | exports (F10) |