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Standards and political connections: Evidence from Tunisia

Author

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  • Hendrik Kruse

    (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - UT - Université de Tours)

  • Inma Martínez-Zarzoso
  • Leila Baghdadi

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.
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Suggested Citation

  • Hendrik Kruse & Inma Martínez-Zarzoso & Leila Baghdadi, 2021. "Standards and political connections: Evidence from Tunisia," Post-Print hal-03676587, HAL.
    • Handle: RePEc:hal:journl:hal-03676587
    DOI: 10.1016/j.jdeveco.2021.102731
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    2. Cali,Massimiliano & Ghose,Devaki & Montfaucon,Angella Faith Lapukeni & Ruta,Michele, 2022. "Trade Policy and Exporters’ Resilience : Evidence from Indonesia," Policy Research Working Paper Series 10068, The World Bank.
    3. Xuejun Wang & Huiying Zhou & Dongmei Su, 2022. "Does the internationalisation of China's agri‐food standards affect export quality upgrading?—Evidence from firm‐product‐level data," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 887-911, October.
    4. Aboushady, Nora & Zaki, Chahir, 2023. "Are global value chains for sale? On business-state relations in the MENA region," IDOS Discussion Papers 17/2023, German Institute of Development and Sustainability (IDOS).
    5. Marcio Cruz & Leila Baghdadi & Hassen Arouri, 2022. "High growth firms and trade linkages: Imports do matter," Small Business Economics, Springer, vol. 59(1), pages 79-92, June.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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