Dynamics of Technical Barriers to Trade on Baltic States’ Export to the World

Abstract

Purpose: This paper uses the gravity model to examine the impact of technical barriers to trade – a non-tariff measure, on exports from three Baltic states to 146 partner countries (91 developed and 55 developing). Method: We used panel data from the Baltic States for the period 1990 to 2018 and employ the Poisson Maximum Likelihood (PPML) and the zero-inflated PPML econometric technique for the estimation that allows this analysis in the presence of high-dimensional random effects. Findings: The results revealed that the effect of TBTs on bilateral exports from the Baltic States is positive and significant reflects trade promotion; similar results are seen in the case of developing and developed partner countries. Furthermore, the comparison revealed that TBT has trade promoting impact in the case of developed and developing countries, but that TBT has affected more in the case of developing countries. Tariffs initiated by partner countries had a negative effect, hence restricting trade, but a higher coefficient value is observed in the case of developing countries. Implications: The study recommends that the Baltic States equip themselves with the necessary means to deal with TBT measures, in particular against developed countries.