International Trade in rough diamonds and the Kimberley Process Certification Scheme

Stefan Borsky and Andrea Leiter

No 2021-02, Graz Economics Papers from University of Graz, Department of Economics

Abstract: In 2003, the Kimberley Process Certification Scheme (KPCS) went into force to stop the trade in those diamonds, directly linked to the fueling of armed conflict and activities of rebel movements, also known as conflict diamonds. This article gives empirical evidence on the impact of the KPCS on international trade in rough diamonds. We find that bilateral KPCS participation facilitates access to international markets for rough diamonds and increases trade values. The bilateral trade impact of the KPCS does not depend on the exporters' economic development nor the extent of market access. A more detailed analysis of exporters' heterogeneity in trade values shows that unilaterally KPCS intensifies the trade impediments resulting from armed conflicts and, thereby, reduces the scale of potential conflict diamonds traded internationally. We further offer evidence that the KPCS-induced trade effects apply not only to exporter- or importer-hubs but equally to smaller trade partners. Our analysis gives insights into how agreements setting a particular standard may affect international trade patterns in conflict minerals.

Keywords: International product standards; conflict diamonds; international trade; gravity model. (search for similar items in EconPapers)
JEL-codes: F53 L15 Q34 Q37 Q56 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-dev and nep-int
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Journal Article: International trade in rough diamonds and the Kimberley Process Certification Scheme (2022)
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