International Standards and Trade

Abstract

While there is a large literature on the economic theory of international standards, and their presumed\reffects, we know much less about how international standards work in practice. This paper reviews the\rbody of empirical work that has investigated the specific question: How international standards impact on\rinternational trade? Do they help or hinder trade? The work reviewed ranges from econometric studies\rusing a variety of measures of standards derived from e.g. the Perinorm database, diffusion of ISO9000,\rregional agreements, mutual recognition agreements and harmonisation, to surveys of exporting firms. A\rmapping of the findings from econometric models shows that there is often, but not always, a positive\rrelationship between international standards and exports or imports, which is in line with the widely held\rview that international standards are supportive of trade. For national (i.e. country-specific) standards\rstudies find positive as well as negative effects on trade and thus provide only qualified support for the\rcommonly held view that national standards create barriers to trade. Overall, the literature reviewed does\rnot provide a single answer to the question of trade effects, and the explanation for this appears to have to\rdo with how the multiple economic effects of standards interact. The paper summarises some of the\rexisting empirical evidence for some of these effects, which include network externalities, variety,\rknowledge, quality and trust, and which merit further research in order to understand when standards help\rtrade, and when not.