International standards and international trade: Empirical evidence from ISO 9000 diffusion

- We estimate impact of ISO 9000 on cross-border trade.
- We surmount methodological challenges: measurement, varied effects and endogeneity.
- We use instrumental variable, multilateral resistance and panel data techniques.
- We find common-language and quality-signaling effects to augment trade.
- We find many developing nations to loose exports due to worldwide standardization.

Empirical scholarship on the standards-trade relationship has been held up due to methodological challenges: measurement, varied effects, and endogeneity. Considering the trade-effects of one particular standard (ISO 9000), we surmount methodological challenges by measuring standardization via national penetration of ISO 9000, allowing standardization to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) channels, and using instrumental variable, multilateral resistance and panel data techniques to overcome endogeneity. We find evidence of common-language and quality-signaling augmenting country-pair trade. Yet, ISO-rich nations benefit the most from standardization, while ISO-poor nations find ISO 9000 to represent a trade barrier due to compliance-cost effects.