New Economics Papers
on Agricultural Economics
Issue of 2005‒12‒14
nineteen papers chosen by

  1. Distortions to World Trade : Impacts on Agricultural Markets and Farm Incomes By Kym Anderson; William J. Martin; Dominique van der Mensbrugghe
  2. Disciplining Agricultural Support through Decoupling By John Baffes; Harry De Gorter
  3. The WTO Doha Round, Cotton Sector Dynamics and Poverty Trends in Zambia By Jorge F. Balat; Guido G. Porto
  4. Social and Environmental Attributes of Food Products in an Emerging Mass Market : Challenges of Signaling and Consumer Perception, With European Illustrations By Jean-Marie Codron; Lucie Sirieix; Thomas Reardon
  5. Activities, Employment, and Wages in Rural and Semi-Urban Mexico By Dorte Verner
  6. Agricultural Trade Reform and the Doha Development Agenda By Kym Anderson; Will Martin
  7. The Profits of Power: Land Rights and Agricultural Investment in Ghana By Markus Goldstein; Christopher Udry
  8. Pesticide Poisoning of Farm Workers : Implications of Blood Test Results from Vietnam By Susmita Dasgupta; Craig Meisner; David Wheeler; Nhan Thi Lam; Khuc Xuyen
  9. Financial Health of Credit Cooperatives in the state of Maharashtra in India: Case Studies of DCCCBs By Deepak Shah
  10. The Structure of Lobbying and Protection in U.S. Agriculture By Kishore Gawande
  11. Health Effects and Pesticide Perception as Determinants of Pesticide Use : Evidence from Bangladesh By Susmita Dasgupta; Craig Meisner; Mainul Huq
  12. Growing together or growing apart ? A village level study of the impact of the Doha round on rural China By Marijke Kuiper; Frank van Tongeren
  13. Poverty in Rural and Semi-Urban Mexico during 1992-2002 By Dorte Verner
  14. The Impact of Trade Liberalization on Household Welfare in Vietnam By Ganesh Seshan
  15. Cultivate or Rent Out ? Land Security in Rural Thailand By Xavier Giné
  16. Feedback Links Between Economy-Wide and Farm-Level Policies : Application to Irrigation Water Management in Morocco By Terry Roe; Ariel Dinar; Yacov Tsur; Xinshen Diao
  17. Crop Insurance in Karnataka By Vijay Kalavakonda; Olivier Mahul
  18. Applications of Negotiation Theory to Water Issues By Carlo Carraro; Carmen Marchiori; Alessandra Sgobbi
  19. The Cost of Compliance with Product Standards for Firms in Developing Countries : An Econometric Study By Keith E. Maskus; Tsunehiro Otsuki; John S. Wilson

  1. By: Kym Anderson (The World Bank); William J. Martin (The World Bank); Dominique van der Mensbrugghe (The World Bank)
    Abstract: The authors provide estimates of the impact that removing all merchandise trade distortions (including agricultural subsidies) would have on food and agricultural production, trade, and incomes. Using the latest versions of the Global Trade Analysis Project (GTAP) database and the World Bank's LINKAGE model of the global economy (projected to 2015), their results suggest farm employment, the real value of agricultural output and exports, the real returns to farm land and unskilled labor, and real net farm incomes would all rise substantially in developing country regions with a move to free merchandise trade, thereby alleviating rural poverty-despite the decline in international terms of trade for developing countries that are net food importers or are enjoying preferential access to agricultural markets of high-income countries.
    Keywords: Agriculture, Poverty, Rural development, International economics
    Date: 2005–10–01
  2. By: John Baffes (The World Bank); Harry De Gorter (Cornell University)
    Abstract: Agricultural protection, particularly in high income countries, have induced overproduction, thereby depressing world commodity prices and reducing export shares of countries which do not support agriculture. One-and perhaps the only-effective way to bring a socially acceptable and politically feasible reform is to replace payments linked to current production levels, input use, and prices by payments which are decoupled from these measures. Overall, the experience with decoupling agricultural support has been mixed while the switch to less distortive support has been uneven across commodities and countries. Rules have changed with new decoupling programs added so expectations about future policies affect current production decisions. Time limits were not implemented and if so, were overruled. Ideally, compensation programs would be universal (open to all sectors in the economy, not just agriculture) or at least non-sector-specific within agriculture. A simple and minimally distorting scheme would be a one-time unconditional payment to everyone engaged in farming or deemed in need of compensation that is nontransferable, along the lines of one-time buyouts without remaining subsidies. To maintain government credibility and reduce uncertainty, eligibility rules need to be clearly defined and not allowed to change. The time period on which payments are based, the level of payments, and the sectors covered should all remain fixed. Support to specific sectors within agriculture should be in the form of taxpayer-funded payments. There should be no requirement of production. Land, labor, and any other input should not have to be in "agricultural use."
    Keywords: Agriculture, International economics
    Date: 2005–03–01
  3. By: Jorge F. Balat (The World Bank); Guido G. Porto (The World Bank)
    Abstract: The Zambian cotton sector went through significant reforms during the 1990s. After a long period of parastatal control, a process of liberalization in cotton production and marketing began in 1994. These reforms were expected to benefit agricultural farmers. In Zambia, these are rural, often vulnerable, smallholders. The authors investigate the connection between the dynamics of the cotton sector and the dynamics of poverty and evaluate to what extent cotton can work as a vehicle for poverty alleviation. They find that cotton can indeed act as an effective mechanism for increased household welfare. They also find income gains associated with cotton production, as well as positive impacts on the long-run nutritional status of Zambian children. The impacts, however, are relatively small.
    Keywords: Agriculture, Poverty, Rural development
    Date: 2005–09–01
  4. By: Jean-Marie Codron (Institut National de la Recherche Agronomique - UMR MOISA - Place Viala - 34060 Montpellier Cedex 1 - FRANCE); Lucie Sirieix (Ecole Nationale Supérieure Agronomique de Montpellier - UMR MOISA - Place Viala - 34060 Montpellier Cedex 1 - FRANCE); Thomas Reardon (Department of Agricultural Economics - Michigan State University - East Lansing, Michigan - USA)
    Abstract: This paper focuses on the environmental and ethical attributes of food products and their production processes. These two aspects have been recently recognized and are becoming increasingly important, in terms of signaling and of consumer perception. There are two thematic domains: environmental and social. Within each domain there are two movements. Hence the paper first presents the four movements that have brought to the fore new aspects of food product quality, to wit: (1) aspects of environmental ethics (organic agriculture and integrated agriculture) and (2)social ethics (fair trade and ethical trade). Then it describes how the actors in the movements producers, retailers, NGOs, and governments) are organized and how consumers perceive each of the movements. From the perspective of the actors in the movements themselves, the movements are grouped into two 'actors' philosophies' : a “radical” philosophy (the organic production and fair trade movements that arose in radical opposition to conventional agriculture or unfair trade relations) and a “reformist” philosophy (the integrated agriculture and ethical trade movements that arose as efforts to modify but not radically change conventional agriculture). From the point of view of consumers, the classification of the movements is based on perceptions of the 'domain' of the movements. That is, consumers tend to perceive as a grouping the organic production movement and the integrated agricultural movement, as they both deal with the environment. By contrast, consumers tend to group the fair trade movement and the ethical trade movement, as they both deal essentially with social ethics. Recently, key players such as large retailers and agribusinesses have adopted as part of their overall quality assurance programs both the environmental and the ethical attributes. Their involvement in and adoption of the goals of the movements have, however, generated tensions and conflicts, in particular within the radical movements, because of concerns of cooptation. The paper identifies challenges for those promoting food products with environmental and social/ethical attributes to communicate coherent signals to consumers at this crucial moment of an emerging mass market for these products.
    Keywords: Consumer perception, Ethical trade, Fair trade, Integrated agriculture, Organic agriculture, Organization, Quality signals
    JEL: L
    Date: 2005–12–02
  5. By: Dorte Verner (The World Bank)
    Abstract: The author addresses the labor markets in rural and semi-urban Mexico. The empirical analyses show that non-farm income shares increase with overall consumption levels and, also, with time. Rural-dwellers in lower quintiles of the consumption distribution tend to earn a larger share of their nonagricultural incomes from wage labor activities. For the poorest, low-productivity wage labor activities are important. The quantile wage regression analysis for rural Mexico shows a rather heterogeneous impact pattern of individual characteristics across the wage distribution on monthly wages. The author's findings reveal that education is key to earning higher wages, and that workers in more dispersed rural areas earn less than their peers in semi-urban rural areas (localities with less than 15,000 inhabitants). The rural non-farm sector is heterogeneous and includes a great variety of activities and productivity levels across non-farm jobs. Moreover it can reduce poverty in a couple of distinct but qualitatively important ways in rural Mexico. The analysis of non-farm employment in rural Mexico suggests that the two key determinants of access to employment and productivity in non-farm activities are education and location.
    Keywords: Agriculture, Poverty, Rural development, Social Development, Labor and employment, Education
    Date: 2005–04–01
  6. By: Kym Anderson (The World Bank); Will Martin (The World Bank)
    Abstract: Anderson and Martin examine the extent to which various regions, and the world as a whole, could gain from multilateral trade reform over the next decade. They use the World Bank's linkage model of the global economy to examine the impact first of current trade barriers and agricultural subsidies, and then of possible outcomes from the World Trade Organization's Doha round. The results suggest moving to free global merchandise trade would boost real incomes in Sub-Saharan Africa and Southeast Asia (and in Cairns Group countries) proportionately more than in other developing countries or high-income countries. Real returns to farm land and unskilled labor and real net farm incomes would rise substantially in those developing country regions, thereby alleviating poverty. A Doha partial liberalization could take the world some way toward those desirable outcomes, but more so the more agricultural subsidies are disciplined and applied tariffs are cut.
    Keywords: International economics
    Date: 2005–05–01
  7. By: Markus Goldstein (The World Bank); Christopher Udry (Economic Growth Center, Yale University)
    Abstract: We examine the impact of ambiguous and contested land rights on investment and productivity in agriculture in Akwapim, Ghana. We show that individuals who hold powerful positions in a local political hierarchy have more secure tenure rights, and that as a consequence they invest more in land fertility and have substantially higher output. The intensity of investments on different plots cultivated by a given individual correspond to that individual’s security of tenure over those specific plots, and in turn to the individual’s position in the political hierarchy relevant to those specific plots. We interpret these results in the context of a simple model of the political allocation of land rights in local matrilineages.
    Keywords: Land tenure, Investment, Institutions
    JEL: O12 O13 O17
    Date: 2005–11
  8. By: Susmita Dasgupta (The World Bank); Craig Meisner (The World Bank); David Wheeler (The World Bank); Nhan Thi Lam (Tien Giang Preventive Medicine Centre); Khuc Xuyen (National Institute of Occupational and Environmental Health, Vietnam)
    Abstract: In this paper, the authors have assessed the incidence and determinants of pesticide poisoning among rice farmers in Vietnam's Mekong Delta. Blood cholinesterase tests suggest that the incidence of poisoning from exposure to organophosphates and carbamates is quite high in Vietnam. Using the medical test results as benchmarks, the authors find that farmers' self-reported symptoms have very weak associations with actual poisoning. Regression analysis of blood tests reveals a lower incidence of poisoning for farmers who avoid the most toxic pesticides and use protective items. The authors also find very large provincial differences in poisoning incidence after they control for individual factors. The results highlight the potential importance of negative externalities, and suggest that future research on pesticide-related damage should include information on local water, air, and soil contamination.
    Keywords: Agriculture, Health and population
    Date: 2005–06–01
  9. By: Deepak Shah (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India)
    Abstract: An analysis encompassing two case studies conducted in forward and backward regions of Maharashtra (India) has shown deterioration in the financial health of central level credit cooperatives (Sangli District Central Cooperative Bank (SDCCB)) in forward region and gross inefficiency in their functioning (Buldana District Central Cooperative Bank (BDCCB)) in the backward region of the state, due mainly to their mounting NPAs or overdues’. Because of substantially high NPAs, the fixed expenses of these institutions have been adversely affected, which in turn have grossly affected the break-even levels of loan advances and deposits of these credit institutions, so much so that there has been huge gap between the break-even levels of loan advances and deposits and the actual loan advances and deposits. In the case of BDCCB, the deficit between actual and the break-even levels are so high (about 60 per cent) that it will be well-nigh impossible for it to overcome this situation. High transaction costs, poor repayment performance, and mounting NPAs are the root causes of the moribund state of rural credit delivery through these cooperatives. Further, it is to be noted that the estimated trend over the past two decades in Maharashtra shows a slower growth in institutional finances through credit cooperatives and also in their membership during the decade of economic reforms (1991-2000) as against the decade preceding it (1980-1990). On the other hand, the outstanding loans of these cooperatives have grown at much faster rate as compared to their loan advances during both pre- and post economic reform periods. The slower growth in institutional finance through credit cooperatives during the decade of 1991-2000 is mainly due to adverse environment created by the financial sector reforms. Due to unfavourable policy framework, much of the deposits of the credit cooperatives are going into investments, instead of advancing loans to the farming sector. As a result, the C-D ratios of these credit cooperatives have been adversely affected. With a view to revive agricultural credit delivery through cooperatives, the need of the hour is to adopt innovative approaches like linking of SHGs and NGOs with mainstream financial institutions, including cooperatives. Such linkages are reported to have not only reduced transaction costs but also ensured better repayment performance. In brief, in order to rejuvenate rural credit delivery system through cooperatives, the root problems facing the system, viz., high transaction cost, poor recovery performance, and NPAs, need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, especially by large farmers, and the individual cases who have borrowed credit from these institutions. In fact, insofar as rural credit delivery through credit cooperatives is concerned, the focus should be on strategies that are required for tackling issues such as sustainability and viability, operational efficiency, recovery performance, small farmer coverage and balanced sectoral development.
    Keywords: Financial Health of Credit Cooperatives in India
    JEL: G
    Date: 2005–12–07
  10. By: Kishore Gawande (Bush School of Government, Texas A&M)
    Abstract: The author surveys the empirical literature on the political economy of agricultural protection. He uses a detailed data set of agricultural Political Action Committee (PAC) contributions over five U.S. congressional election cycles over the 1991-2000 period to investigate the relationship between lobbying spending and agricultural protection. A detailed graphical analysis of campaign contributions by the agricultural PACs indicates that although there are very many PACs, in most sectors the majority of contributions are made by very few PACs. Econometric analysis reveals that lobbying spending by agricultural PACs is positively associated with the use of nontariff barriers and specific tariffs by the United States. There is a strong association between the average U.S. tariff on goods that benefit from U.S. export subsidies and lobbying spending. And there is no association between agricultural protection and trade measures such as import penetration and the export-to-output ratio.
    Keywords: Agriculture, International economics
    Date: 2005–09–01
  11. By: Susmita Dasgupta (The World Bank); Craig Meisner (The World Bank); Mainul Huq (Development Policy Group, Bangladesh)
    Abstract: In a recent survey of 820 Boro (winter rice), potato, bean, eggplant, cabbage, sugarcane, and mango farmers in Bangladesh, over 47 percent of farmers were found to be overusing pesticides. With only 4 percent of farmers formally trained in pesticide use or handling, and over 87 percent openly admitting to using little or no protective measures while applying pesticides, overuse is potentially a threatening problem to farmer health as well as the environment. To model pesticide overuse, the authors used a 3-equation, trivariate probit framework, with health effects and misperception of pesticide risk as endogenous dummy variables. Health effects (the first equation) were found to be strictly a function of the amount of pesticides used in production, while misperception of pesticide risk (the second equation) was determined by health impairments from pesticides and the toxicity of chemicals used. Pesticide overuse (the third equation) was significantly determined by variation in income, farm ownership, the toxicity of chemicals used, crop composition, and geographical location. The results highlight the necessity for policymakers to design effective and targeted outreach programs that deal specifically with pesticide risk, safe handling, and averting behavior. Ideally, the approach would be participatory in nature to address key informational gaps, as well as increasing a farmers' awareness retention. The results also point to specific crops and locations experiencing a higher prevalence of overuse-bean and eggplant in general-and overall production in the districts of Chapainawabganj, Chittagong, Comilla, Jessore, Narshingdi, Rajshahi, and Rangpur. Focusing efforts in these crop and geographical areas may have the most measurable effects on pesticide overuse.
    Keywords: ???
    Date: 2005–11–01
  12. By: Marijke Kuiper (Agricultural Economics Research Institute (LEI) ­ Wageningen UR); Frank van Tongeren (Agricultural Economics Research Institute (LEI) ­ Wageningen UR)
    Abstract: Most studies of the opening of the Chinese economy focus at the national level. The few existing disaggregated analyses are limited to analyzing changes in agricultural production. The authors use an innovative village equilibrium model that accounts for nonseparability of household production and consumption decisions. This allows them to analyze the impact of trade liberalization on household production, consumption, and off-farm employment, as well as the interactions among these three aspects of household decisions. They use the village model to analyze the impact of price changes and labor demand, the two major pathways through which international trade affects households. Analyzing the impact of trade liberalization for one village in the Jiangxi province of China, the authors find changes in relative prices and outside village employment to have opposite impacts on household decisions. At the household level the impact of price changes dominates the employment impacts. Comparing full trade liberalization and the more limited Doha scenario, reactions are more modest in the latter case for most households, but the response is nonlinear to increasing depth of trade reforms. This is explained by household-specific transaction (shadow) prices in combination with endogenous choices to participate in the output markets. Rising income inequalities are a growing concern in China. Whether trade liberalization allows incomes to grow together or to grow apart depends on whether one accounts for the reduction in consumption demand when household members migrate. Assessing the net effect on the within-village income distribution, the authors find that poorer households that own draught power gain most from trade liberalization. The households that have to rely on the use of own labor for farm activities and are not endowed with traction power, nor with a link to employment opportunities in the prospering coastal regions, have fewer opportunities for adjustment.
    Keywords: Rural development, International economics
    Date: 2005–09–01
  13. By: Dorte Verner (The World Bank)
    Abstract: This paper analyzes poverty in rural and semi-urban areas of Mexico (localities with less than 2,500 and 15,000 inhabitants, respectively) and provides guidance on a social agenda and poverty alleviation strategy for rural Mexico. The analyses are based on INIGH and ENE data sets for 1992-2002. Monetary extreme poverty affected 42 percent of the rural dwellers in dispersed rural areas and 21 percent in semi-urban areas in 2002, slightly less than one decade earlier. Most of the rural poor live in dispersed rural areas and 13.2 million people live in poverty in rural Mexico with less than 15,000 inhabitants. It is disproportionately a feature of households whose main job is in the agricultural sector, as self-employed farmers or rural laborers, and that have at most a primary education. However, the incidence of extreme rural poverty has declined since 1996 but at a slower pace than the decline in urban poverty. Hence, the rural-urban poverty gap increased in recent years and in some places extreme poverty is at least four times higher in rural than in urban areas. Moreover, not only is the income gap in urban areas increasing, but also the gap between richer and poorer segments of the population in the rural areas is growing. Finally, the gap between rich and poor regions is still large.
    Keywords: Agriculture, Urban development, Poverty, Rural development, Social Development, Education
    Date: 2005–04–01
  14. By: Ganesh Seshan (The World Bank)
    Abstract: What is the effect of trade liberalization on households in developing countries? To what extent do the poor benefit when local markets are made more accommodative to international trade? The author empirically analyzes the distributional impact of trade policies on households in a low-income country with a large rural economy where labor markets are imperfect. The methodology in this paper, which can be applied to various types of labor market conditions, relates changes in prices attributed to trade reforms to changes in household welfare, income distribution, and poverty using theoretically consistent measures of producer and consumer welfare. The author investigates the effects on poverty and income distribution of national and international market integration in Vietnam's rice sector and fertilizer market between 1993 and 1998, a period of ongoing market reforms when the national poverty rate fell sharply from 59 percent to 37 percent. He finds that when the effects of opening the rice and fertilizer market are isolated, Vietnam's agricultural trade reforms did not contribute to a significant improvement in overall household welfare or decline in poverty over this period. Nonetheless, the liberalization exercise can explain about half of the reduction in poverty incidence among farm households. The results also show that liberalization did not exacerbate income inequality, but did generate gains for rural households across the distribution, particularly the poor, at the expense of urban households.
    Keywords: Agriculture, Rural development, International economics, Labor and employment
    Date: 2005–03–01
  15. By: Xavier Giné (The World Bank)
    Abstract: In the 1980s the Thai government tried to legalize squatters by issuing special titles that restricted the sale and rental of the land. Using data from 2,874 farming households collected in 1997, the author finds that in places where these government titles where issued, leased plots are more likely to be titled than those that are self-cultivated. For these areas, he uses a model to estimate a 6 percent risk premium in the rental rate for untitled plots. In other areas, however, land rights play no role in the decision to lease land and the rental rate of untitled plots does not include a risk premium. The results indicate that this policy distorted the land rental market by triggering a sense of insecurity among landowners.
    Keywords: Rural development
    Date: 2005–10–01
  16. By: Terry Roe (University of Minnesota); Ariel Dinar (The World Bank); Yacov Tsur (Hebrew University of Jerusalem, Israel); Xinshen Diao (International Food Policy Research Institute)
    Abstract: The authors focus on policy interventions for improving irrigation water allocation decisions by including both macro and micro considerations in a unified analytical computable general equilibrium (CGE) framework. The approach is demonstrated, using the case of Morocco, by analyzing selected policy (top-down and bottom-up) interventions and external shocks that affect the water sector. Both direct and indirect effects of these interventions are identified. The top-down (macro-to-micro) links are of a trade reform type. The bottom-up (micro-to-macro) links pertain to changes in farm water assignments and the possibility of water trading. The authors find that water productivity is strongly influenced by these policies, with the general equilibrium (indirect) effects modifying and sometimes reversing the partial equilibrium (direct) effects. They also find that the impacts of the two reforms assessed are different, with trade reform having an absolute impact of a higher magnitude than the water reform. Finally, the authors show that the sequence of introducing the policy reforms has different consequences.
    Keywords: Agriculture, Poverty, Rural development, Labor and employment, Macroeconomics and growth
    Date: 2005–03–01
  17. By: Vijay Kalavakonda (The World Bank); Olivier Mahul (The World Bank)
    Abstract: The authors examine the performance of the crop insurance scheme in Karnataka, a southern state of India and the second driest state in the country. Their analysis highlights weaknesses in product design, implementation challenges, and operational problems. The authors' finding is that the crop insurance scheme in its current form does not achieve its objectives, either explicit (risk management) or implicit (safety net and containment of both the central and state governments' contingent liability). The crop insurance scheme performs poorly both in terms of coverage (number of hectares insured and number of farmers purchasing insurance) and financial performance. The authors provide a framework for designing a crop insurance scheme based on the premise that insurance is a cost effective risk management techniques. They also provide some new ideas and thinking toward both improving the existing crop insurance scheme and exploring alternatives to the current product, based on an area-yield approach.
    Keywords: Agriculture, Rural development
    Date: 2005–07–01
  18. By: Carlo Carraro (University of Venice); Carmen Marchiori (London School of Economics); Alessandra Sgobbi (Fondazione Eni E. Mattei)
    Abstract: The authors review the applications of noncooperative bargaining theory to water related issues-which fall in the category of formal models of negotiation. They aim to identify the conditions under which agreements are likely to emerge and their characteristics, to support policymakers in devising the "rules of the game" that could help obtain a desired result. Despite the fact that allocation of natural resources, especially trans-boundary allocation, has all the characteristics of a negotiation problem, there are not many applications of formal negotiation theory to the issue. Therefore, the authors first discuss the noncooperative bargaining models applied to water allocation problems found in the literature. Key findings include the important role noncooperative negotiations can play in cases where binding agreements cannot be signed; the value added of politically and socially acceptable compromises; and the need for a negotiated model that considers incomplete information over the negotiated resource.
    Keywords: Agriculture, Infrastructure, Environment, Governance
    Date: 2005–06–01
  19. By: Keith E. Maskus (University of Colorado at Boulder); Tsunehiro Otsuki (Osaka University); John S. Wilson (The World Bank)
    Abstract: Standards and technical regulations exist to protect consumer safety or to achieve other goals, such as ensuring the interoperability of telecommunications systems, for example. Standards and technical regulations can, however, raise substantially both start-up and production costs for firms. Maskus, Otsuki, and Wilson develop econometric models to provide the first estimates of the incremental production costs for firms in developing nations in conforming to standards imposed by major importing countries. They use firm-level data generated from 16 developing countries in the World Bank Technical Barriers to Trade (TBT) Survey Database. Their findings indicate that standards do increase short-run production costs by requiring additional inputs of labor and capital. A 1 percent increase in investment to meet compliance costs in importing countries raises variable production costs by between 0.06 and 0.13 percent, a statistically significant increase. The authors also find that the fixed costs of compliance are nontrivial-approximately $425,000 per firm, or about 4.7 percent of value added on average. The results may be interpreted as one indication of the extent to which standards and technical regulations might constitute barriers to trade. While the relative impact on costs of compliance is relatively small, these costs can be decisive factors driving export success for companies. In this context, there is scope for considering that the costs associated with more limited exports to countries with import regulations may not conform to World Trade Organization rules encouraging harmonization of regulations to international standards, for example. Policy solutions then might be sought by identifying the extent to which subsidies or public support programs are needed to offset the cost disadvantage that arises from nonharmonized technical regulations.
    Keywords: Industry, Private sector development, International economics
    Date: 2005–05–01

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