Behind the heterogeneous trade effects of standards: Multi-sector evidence from China

Standards can influence trades via multiple channels, such as signaling effects, common language effects, and compliance costs. We argue that the impacting channels of standards differ across sectors, which originates from diverse sector features and results in heterogeneous trade effects of standards. In this paper, we focus on the trade effects of standards in developing countries as exporters. Gravity models are applied on the panel data of China's bilateral trades in 33 sectors from 2002 to 2016. We examine the moderating role of sector features, including the intensity of capital, labor, and technology, on the trade effects of standards. We find that trade-promoting effects of standards are stronger in high-capital sectors and weaker in high -labor sectors. In high-tech sectors, the trade-promoting effects are stronger for internationally harmonized standards while weaker for national standards. Our findings provide managerial implications on standardization policies for China and other developing countries. For instance, international harmonization of standards should be highlighted in high-tech sectors.