The Bright Side of the Generalized System of (Trade) Preferences: Lessons from Agricultural Trade

Anupa Sharma, Kathryn Boys and Jason Grant

Journal of Agricultural and Resource Economics, 2019, vol. 44, issue 01

Abstract: Empirical evidence on the Generalized System of Preferences (GSP) for low-income countries generally portrays a rather stark prediction: the program has produced virtually no impact on intended low-income beneficiaries’ exports to high-income countries. This result, based on total merchandise trade, is misleading because it masks three underlying heterogeneities in the program: i) preference structure across countries, ii) pre-existing distortions across sectors, and iii) rules of origin. Using a theoretically consistent gravity equation for sector- and product-level trade over 1962–2010, we illustrate that the GSP has delivered significant positive effects for lowincome countries’ agricultural exports (but not necessarily for their nonagricultural exports) to developed countries.

Keywords: Agricultural and Food Policy; International Relations/Trade (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:281312

DOI: 10.22004/ag.econ.281312

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