Good governance and preferential trade: evidence from the Swiss generalized system of preferences

Abstract

Purpose

The purpose of this paper is to determine if the institutional quality of developing countries (DCs) and least-developed countries (LDCs) contributes to a significant increase in the utilization rate of the Swiss generalized system of preferences in the agro-food sector.

Design/methodology/approach

The authors use state of the art regression techniques accounting for zero values to identify if the institutional quality – separately depicted by the Worldwide Governance Indicators, the Index of Economic Freedom and the Human Development Index – can contribute in overcoming non-tariff barriers (NTBs) to trade.

Findings

The institutional quality exerts a consistent positive effect on the level of utilization of trade preferences.

Research limitations/implications

Swiss food trade represents, of course, only a very small share of world trade, therefore it would be worthwhile to extend the analysis to other countries and sectors.

Practical implications

Industrialized countries’ development policies should more strongly focus on capacity building in DCs and LDCs to strengthen trade-related institutions.

Originality/value

The study focuses on an often underemphasized element in international trade relations – the role of the institutional quality in overcoming NTBs to trade.

Citation

Ritzel, C., Kohler, A. and Mann, S. (2018), "Good governance and preferential trade: evidence from the Swiss generalized system of preferences", International Journal of Social Economics, Vol. 45 No. 2, pp. 259-274. https://doi.org/10.1108/IJSE-11-2016-0331

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