Exports are one of the most important contributors to a country’s economic growth. It is thus logical that developing countries are not as export-oriented as developed economies. Trade barriers are renown for their negative impact on exports in developing countries, while working in favor of the developed economies that set trade measures.
As part of the ERF 20th pre-conference, the second session of the policy seminar on Export Diversification in the ERF Region tackled product standards and trade. Chahir Zaki, ERF research associate, presented a paper on the effect of Sanitary and Phytosanitary (SPS) measures on international trade. The paper, titled ‘Do product standards matter for margins of trade in Egypt? Evidence from firm-level data‘, and is co-authored with ERF’s own Rana Hendy and Hoda El-Enbaby.
Zaki explains how SPS measures affect exports on the firm level, with a focus on Egyptian exports. He categorizes the export system into intensive and extensive. Intensive exports being existing exporters, products and markets. While extensive exporting entails introducing new exporters, new export products and exposing them to new markets. Zaki highlights the main finding of the study, being that reducing sanitary measures is likely to increase the extensive margin.
Finally, Zaki suggests that the Egyptian government can play an important role in encouraging Egyptian exporters, by guaranteeing the quality of their export products, which would mitigate the spectrum of measures imposed on Egyptian exporters by the developed economies; such as the EU. Zaki also explains that SPS measures limit small and medium exporters a lot more than large exporters, who are more resourceful and capable to comply with trade measures. The other recommendation thus is to cluster small and medium exporters to export more and reduce the negative impact of barriers.