Technical regulations and exporters' dynamics: evidence from developing countries

This paper estimates the relation between technical regulations and firms' export dynamics using country-sector indicators from two firm-level datasets-the novel UN ITC NTM Business Surveys and the World Bank Exporter Dynamics Database-for 18 developing countries over the 2010-2014 period. The results from the analysis indicate that export markets where exporters perceive technical regulations as more burdensome are characterized by a lower number of exporters, a lower value of exports, and a higher concentration rate. These results are in line with the prediction of the heterogeneous firms' trade theory (Melitz, 2003): additional trade costs are expected to push some firms out of exporting, therefore reducing the total number of exporters and increasing concentration. Also, technical regulations hit small firms' exports twice as hard as they hit large firms, confirming that smaller firms react more strongly to changes in trade costs.