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Geopolitical interests and preferential access to U.S. markets

Author

Listed:
  • Lederman, Daniel
  • Ozden, Caglar
Abstract
The United States imports around 25 percent of its merchandise under some form of preferential trade regime. The authors examine both the origins and consequences of U.S. trade preferences in the context of the gravity model of international trade. First, they provide estimates of the impact of preferential trade regimes in terms of access to U.S. markets while controlling for geo-strategic interests that determine the countries that are offered commercial preferences. Second, the authors consider not only country eligibility but also the extent of utilization of these programs. Third, they provide new estimates of the impact of transport and transactions costs beyond distance. In the standard gravity estimation, the authors find that beneficiaries of these preferences, except GSP, export 2-3 times more than the excluded countries, after controlling for country and product characteristics. Nonetheless, the estimated effects of these programs are lower when controlling for utilization ratios and selection biases due to the correlation between geopolitical interests and the standard explanatory variables used in the gravity model of trade, such as countries'geographic distance from the United States.

Suggested Citation

  • Lederman, Daniel & Ozden, Caglar, 2005. "Geopolitical interests and preferential access to U.S. markets," Policy Research Working Paper Series 3531, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3531
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    Cited by:

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    2. Carlos Felipe Jaramillo & Daniel Lederman & Maurizio Bussolo & David Gould & Andrew Mason, 2006. "Challenges of CAFTA : Maximizing the Benefits for Central America," World Bank Publications - Books, The World Bank Group, number 7127.
    3. Vincent Vicard, 2009. "On trade creation and regional trade agreements: does depth matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 167-187, July.
    4. Cong S. Pham & Mary E. Lovely & Devashish Mitra, 2017. "The home-market effect and bilateral trade patterns: A reexamination of the evidence," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 8, pages 135-152, World Scientific Publishing Co. Pte. Ltd..
    5. Gnutzmann, Hinnerk & Gnutzmann-Mkrtchyan, Arevik, 2020. "The Impact of Trade Preferences Removal," Hannover Economic Papers (HEP) dp-663, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    6. Emilie M. Hafner-Burton & Layna Mosley & Robert Galantucci, 2019. "Protecting Workers Abroad and Industries at Home: Rights-based Conditionality in Trade Preference Programs," Journal of Conflict Resolution, Peace Science Society (International), vol. 63(5), pages 1253-1282, May.
    7. Julian Hinz, 2023. "The ties that bind: geopolitical motivations for economic integration," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(1), pages 51-100, February.
    8. Cooke, Edgar F. A., 2011. "A matching approach to study the impact of agoa on Sub-Saharan African countries," MPRA Paper 34670, University Library of Munich, Germany.
    9. Hinnerk Gnutzmann & Arevik Gnutzmann‐Mkrtchyan, 2022. "The impact of trade preferences removal: Evidence from the Belarus Generalized System of Preferences withdrawal," The World Economy, Wiley Blackwell, vol. 45(9), pages 2977-3000, September.
    10. Bernhard Herz & Marco Wagner, 2011. "The Dark Side of the Generalized System of Preferences," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 763-775, September.
    11. Calì, Massimiliano & te Velde, Dirk Willem, 2011. "Does Aid for Trade Really Improve Trade Performance?," World Development, Elsevier, vol. 39(5), pages 725-740, May.
    12. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.

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