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Title: The not-so-generalized effects of the Generalized System of Preferences

Author(s): Emanuel Ornelas and Marcos Ritel

Publication Date: September 2018

Keyword(s): Gravity Equation, GSP, nonreciprocity, trade policy and trade preferences

Programme Area(s): International Trade and Regional Economics

Abstract: We use an empirical gravity equation approach to study how nonreciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line with existing studies, the average trade effect stemming from nonreciprocal preferences is highly unstable across specifications. However, once we allow for heterogeneous effects, results become robust and economically important. Specifically, NRTPs have a strong effect on the exports of beneficiaries when they are members of the World Trade Organization and are very poor. Not-so-poor beneficiaries also expand foreign sales, but only if they are not WTO members. For all others, the average export effects of NRTPs are mute.

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Bibliographic Reference

Ornelas, E and Ritel, M. 2018. 'The not-so-generalized effects of the Generalized System of Preferences'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13208