Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2006:4: Assessing the Effects of EU Trade Preferences for Developing Countries

Maria Persson () and Fredrik Wilhelmsson ()
Additional contact information
Maria Persson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Fredrik Wilhelmsson: AgriFood Economics Centre, Postal: Department of Economics, AgriFood Economics Centre, Box 730, S-22007 Lund, Sweden

Abstract: Since the 1960’s, the EU has offered trade preferences to developing countries in a complex set of systems. Broadly these systems can be divided into preferences for African, Caribbean and Pacific (ACP) countries, Mediterranean preferences and the Generalised System of Preferences (GSP). We construct a detailed database over these trade preferences and use it to assess whether they have had an effect on developing countries’ exports and whether the systems have had different impact on exports. To achieve this we also estimate the effect of the successive EU enlargements on exports from developing countries. A gravity model taking into account the evolution of developing countries’ exports is estimated on a large sample of EU importers and developing country exporters over the period 1960-2002. The main findings are that certain preference systems have had large effects—the largest are found for the ACP countries, where the preferences increase exports by about 30 %, followed by Mediterranean countries—and that, countries joining the EU, ceteris paribus, import less from developing countries as they become members.

Keywords: EU trade preferences; Trade; Developing Countries; Gravity model

JEL-codes: C23; F13

27 pages, First version: February 14, 2006. Revised: June 26, 2006.

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