GETTING AN INTERNATIONAL QUALITY STANDARD IMPROVES EXPORTS FOR MANUFACTURE FIRMS IN LATIN AMERICA?

Abstract

International trade markets are shaped by different standards and technical regulations across countries and regions affecting trade. This paper analyzes the relationship between international standards and exports for manufacture firms in Latin America. The study tests the hypothesis that internationally-recognized quality standards compliance helps firms to export. Throughout an econometric approach, a logit model examines the relationship between firm's decision to export (yes/no), and the variable of whether or not a firm has an internationally-recognized quality standard. The study uses data from the World Bank Enterprise Survey. It concludes that for each firm's export determinant, the probability to export is consistently higher when firms comply with the internationally-recognized quality standards. This means that, regardless of the size, age, foreign ownership, use of communication technologies, manufacture sector and country type, a firm benefits in terms of exports, from internationally-recognized quality standard compliance. In this sense, policymakers may create programs to proactively support trade; such as training firms on how achieve compliance with international standards and subsidize part of the cost. On the institutional framework, these policies could be achieved by improving capacity by rethinking the role and evaluate the performance of (1) the Export Promotion Agency and (2) the National Standards Body. Which opens a new line of research for these topics of public policy and public administration.