Standards and political connections: Evidence from Tunisia

Hendrik W. Kruse, Inmaculada Martínez-Zarzoso and Leila Baghdadi

Journal of Development Economics, 2021, vol. 153, issue C

Abstract: In this paper we investigate whether trade liberalization leads to more stringent product standards in a developing country context, uncovering the role that the connected firms’ market share plays in markets dominated by imports. We estimate a two-part model using data over the period from 2002 to 2010 to test whether additional product standards emerge in sectors where politically connected firms have a higher market share. Our main results show that the mechanisms we anticipated are in fact at play in Tunisia. During the implementation period of the EU-Tunisia association agreement, we find that sectors with a higher import share of connected firms – linked to the Ben Ali family – tend to have a higher probability of an increasing number of technical barriers to trade. This result is robust to addressing endogeneity issues and to the introduction of dynamics into the model.

Keywords: NTMs; Market power; Political economy; Development; Imports; Tunisia (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:153:y:2021:i:c:s0304387821001036

DOI: 10.1016/j.jdeveco.2021.102731

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