On 3 February 2017, the National Bank of Ukraine held the next in a series of open research seminars with the participation of scholars, experts, analysts and NBU representatives. During the seminar, the participants discussed the research findings presented by Mr Volodymyr Vakhitov, the Kyiv School of Economics (KSE) faculty member and a Senior Fellow at the National Economic Institute in his paper on "Non-tariff measures, exporting, and productivity: evidence from microdata in food processing industry".
The research was conducted jointly with Ms Veronika Movchan, an Academic Director at the Institute for Economic Research and Policy Consulting (IER) and Mr Oleksandr Shepotylo, a lecturer at Bradford University School of Management and Ms Mariia Panga, a leading economist of the NBU Financial Stability Department.
The researcher said that non-tariff measures (NTMs) play an increasingly important role in shaping trade flows as they determine the quality and safety of goods for consumers. In practice, NTMs are often far more trade-restrictive than import tariffs. Therefore, the authors focused on ecology, sanitary, phytosanitary, and veterinary measures to investigate how these measures influence probability and export volumes in in the food-processing industry.
The researchers found that that NTMs influence production and export volumes in two ways. First, more stringent food safety and product quality requirements (for example, ecology controls) play a role of positive demand shifter, because consumers in foreign countries are concerned about the quality and safety of food. They also favor buying products from a country with tougher standards. Second, NTMs are likely to encourage producers to switch to supplier of better quality inputs, thus increasing the product competitiveness and, accordingly, boosting firms' export potential. At the same time, NTMs in upstream industries lower production and export volumes. However, NTMs do not reduce a probability that a company becomes an exporter.
The researcher pointed out that NTMs have a positive effect on exports as they encourage exporters to diversify trade flows. Mr Volodymyr Vakhitov cited an example when phytosanitary restrictions imposed on Ukrainian producers of meat and dairy products imposed by the Russian Federation artificially restricted their access to the domestic market. However, Ukrainian exporters were able to take advantage of these restrictions by diversifying trade flows away from the Russian market toward the EU single market where Ukrainian products enjoy strong demand owing to their strong competitive advantages (such as price and quality).
As a side note, the NBU has held Open Research Seminars since 2015. These seminars are intended to promote communication and interaction, as well as to provide an efficient platform for high-level expert discussions focused on issues related to the financial system's operation and activities of central banks. These seminars provide researchers and experts with opportunities to exchange ideas and experience with foreign peers, thus contributing to the development of the national research potential, promoting the dissemination and practical application of research findings and providing policy advice to financial market regulators and financial institutions.
We invite potential contributors to participate in the upcoming seminars and present the findings of their research studies. To this end, please send your submissions (CV, abstract, with an indication of a suitable date for the seminar to take place. Please send your proposals to the Research Division of the Monetary Policy and Economic Analysis Department for consideration via e-mail to: [email protected].