US Trade Preferences and Export Performance of Developing Countries: Evidence from the Generalized System of Preferences

Preferential market access such as the generalized system of preferences (GSP) is clearly recognized as a way of enabling developing countries export their way out of poverty. It has been a vital feature of industrialized countries' commercial policy for nearly 30 years. This study empirically explores the linkages between US trade preferences under the GSP and beneficiary country exports. Using a large US import database covering over 120 developing countries, the study examines the extent to which GSP influences export performance. The results largely indicate that the GSP has a significant and positive effect on beneficiary exports to US for all country and product groups. A proper understanding of this relationship will help donors and recipients devise appropriate policies to help encourage the growth and diversification of exports that is so vital for developing countries.