Séminaire d’économie de Bordeaux

Dela-Dem Doe Fiankor

(University of Göttingen)

 Pesticide Regulatory Heterogeneity, Foreign Sourcing, and Global Agricultural Value Chains

Abstract
Regulations on the production and consumption of goods are very heterogeneous across countries. Whereas the effects of regulations on exports are well known, the responses of importers to heterogeneous and frequently changing country-specific regulations are not well understood.
We combine Swiss firm-level import customs transaction data with country-product-year-specific maximum residue limits to investigate the effect of pesticide regulatory heterogeneity on firm- level imports and assess the moderating role of firm size and global value chain participation. Relying on a global sourcing model, we find that regulatory heterogeneity reduces imports but
less so in larger, and diversified firms. Participating in global value chains also improves firms’ flexibility toward heterogeneous regulation. Business diversification—while reducing the gains from trade and scale—could help firms cope with heterogeneous international regulations.

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