Evaluating the Economic Impact of Technical Standards in Peru

The Project at A Glance

International standards are essential elements for facilitating global trade, they play a crucial role in providing interoperability, maintaining transparency as well as enabling a smooth flow of both imports and exports. However, meeting international standards also increase costs for exporting countries due to the need to comply with production processes associated with the adoption of a standard.

In this context, International Economics provided technical support to the Ministry of Foreign Trade and Tourism of Peru (MINCETUR) in assessing the economic impact of international standards in sectors of export interest to Peru. The team conducted studies of the garment and fruit production industries and drafted two written gender sensitive and inclusive reports.

The project was part of the Expert Deployment Mechanism for Trade and Development (EDM) program, funded by GAC and implemented by Cowater International.

What We Found

International standards are vital for facilitating global trade and in a global context, standards are seen as solutions for maintaining transparency in international trade. Businesses adopt these certifications to access foreign markets and address market failures. International standards signify reliability and safety, boosting customer confidence and offering a competitive edge by meeting regulatory requirements. However, meeting these standards incurs costs, and these can be burdensome for firms in developing countries lacking necessary resources. Harmonization with international standards like ISO can mitigate these negative impacts.

Against this background, the project aimed to assess the economic impact of international standards in sectors of export interest to Peru. International Economics’ team conducted research studies of the garment and fruit production industries and drafted two written gender sensitive and inclusive reports, covering the following elements:

Description of the value chains in each industry;
Identification of the main impacts of technical standards;
Analysis of the value drivers and key indicators of performance; and
Measurement of the economic benefits of technical standards.

Our Strategy and Impact

The project was undertaken in a phase-based approach, with each phase involving different activities at different stages. After a comprehensive review of the existing literature, documents, and reports available on the impact of international standards on international trade in garment and fruit, the team conducted stakeholder interviews to obtain an in-depth understanding of the use and adoption of international standards in Peru to have a better understanding of the in-country situation.

Our team then undertook the value chain analysis of the garment and fruit production sectors in Peru, which focused on the most pressing areas from the pillars of competitiveness, identified though initial stakeholder consultations. In parallel, the team undertook the economic analysis to determine the impact of the standards on the sector – first, assessing the estimated economic benefits arising from the adoption of standards for individual firms, followed by estimating the wider economic impact from adopting standards across the industry and economic aggregated. Based on the analysis, the studies proposed recommendations to identify market access potential and address highly distortive supply chain constraints.

Our Core Solutions

The world economy is continuously impacted by new risks and challenges, causing significant disruptions to international trade. At International Economics, we provide strategic insights to assist organisations, businesses, and governments in anticipating risks, building resilience, mitigating impacts, and supporting our clients on their recovery against such shocks.

We support decision-makers with informed and evidence-based analyses and policy options. We map out key government measures and responses to the risks and challenges to formulate strategies for our clients to respond and adapt to the new social, political, and economic landscapes.