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Improving Preferential Market Access through Rules of Origin: Firm-Level Evidence from Bangladesh†

Improving Preferential Market Access through Rules of Origin: Firm-Level Evidence from Bangladesh† AbstractIn 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. (JEL F13, F14, L67, O14, O19) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Economic Policy American Economic Association

Improving Preferential Market Access through Rules of Origin: Firm-Level Evidence from Bangladesh†

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Improving Preferential Market Access through Rules of Origin: Firm-Level Evidence from Bangladesh†

Sytsma, Tobias
American Economic Journal: Economic Policy , Volume 14 (1) – Feb 1, 2022

Abstract

AbstractIn 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. (JEL F13, F14, L67, O14, O19)

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References (73)

Publisher
American Economic Association
Copyright
Copyright © 2022 © American Economic Association
ISSN
1945-7731
DOI
10.1257/pol.20200257
Publisher site
See Article on Publisher Site

Abstract

AbstractIn 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. (JEL F13, F14, L67, O14, O19)

Journal

American Economic Journal: Economic Policy – American Economic Association

Published: Feb 1, 2022

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