Article
Does the Designation of Least Developed Country Status Promote Exports?
The Journal of International Trade & Economic Development
(2020)
Abstract
In this paper we examine to what extent developing countries export more as a result of having the official Least Developed Country (LDC) status, and consequently being eligible for a range of unilateral trade preferences. We estimate a gravity model of trade over the period 1973-2013, in which identification is achieved by exploiting the particularities and asymmetries of ‘inclusion’ and ‘graduation’ criteria of LDC status. As mechanisms through which LDCs might benefit, we evaluate the effectiveness of individual trade preference schemes for LDCs of the European Union, United States, Canada, Japan, Australia, New Zealand, Norway, and Turkey and the impact of LDC status on exports. We find that first, individual trade preference regimes are, on average, not always beneficial in terms of increased export values for beneficiary countries. Export promoting effects are found for the individual Generalized System Preference (GSP) schemes of some developed countries and some sectors. Second, a country’s official designation as a LDC is associated with higher aggregated exports. This is particularly the case for LDCs that export agricultural goods and light manufacturing products, including textiles and leather after 1990. Third, it is worthwhile to note that the positive effect of LDC status is significant and sizable even when controlling for specific trade preference schemes suggesting that there are other benefits of LDC status that play a role in promoting exports.
Keywords
- least developed countries,
- LDC,
- trade preferences,
- gravity model,
- generalized system of preferences,
- GSP
Disciplines
Publication Date
Winter November, 2020
Citation Information
Stephan Klasen, Inmaculada Martinez-Zarzoso, Felicitas Nowak-Lehmann D. and Matthias Bruckner. "Does the Designation of Least Developed Country Status Promote Exports?" The Journal of International Trade & Economic Development (2020) Available at: http://works.bepress.com/inma_martinez_zarzoso/58/
Creative Commons license
This work is licensed under a Creative Commons CC_BY International License.