The effects of cooperation in accreditation on international trade: Empirical evidence on ISO 9000 certifications

Companies use standards as a tool to signal their investments in quality upgrading and performance. We argue that the impact of this signal depends on the trust in the accreditation system and the development status of a country. Representing the workhorse of research in international trade, we use a gravity model to examine the trade effects of ISO 9000 diffusion and cooperation in accreditation. The model is estimated by applying a country-pair fixed effects regression approach with instrumental variables and multilateral resistance terms to a panel data set covering a 13-year period from 1999 to 2012. This allows us to test our hypotheses with respect to the moderating role of international cooperation in accreditation on the trade effects of ISO 9000 diffusion. We show that certification promotes trade and that signatories to the Multilateral Recognition Arrangement of the International Accreditation Forum (IAF MLA) trade significantly more. The IAF MLA is of particular importance to the trade among developing countries. For policy makers, our results highlight the importance of support for accreditation institutions in developing countries.