American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Improving Preferential Market Access through Rules of Origin: Firm-Level Evidence from Bangladesh
American Economic Journal: Economic Policy
vol. 14,
no. 1, February 2022
(pp. 440–72)
Abstract
In countries where there exist limited opportunities to source inputs locally, rules of origin undermine access to preferential trade agreements for final goods exporters. I analyze the 2011 revision to the rules of origin associated with the European Union's Generalized System of Preferences, which allowed apparel producers in least developed countries to use internationally sourced textiles in exported products. Using transaction-level data on Bangladeshi apparel firms, I find that the rules of origin effectively cut the preferential margin by three-fourths. Liberalizing the rules of origin resulted in firm-level revenue growth, which was driven by the intensive margin through increased shipment sizes and quality upgrading.Citation
Sytsma, Tobias. 2022. "Improving Preferential Market Access through Rules of Origin: Firm-Level Evidence from Bangladesh." American Economic Journal: Economic Policy, 14 (1): 440–72. DOI: 10.1257/pol.20200257Additional Materials
JEL Classification
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- L67 Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O19 International Linkages to Development; Role of International Organizations
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