# **SECTION V**

# **Data**

The time period under consideration is 1986 to 2003. This is motivated by the fact that the EU’s Old Approach to harmonization was phased out in 1985, while the first harmonization directive investigated in this paper was passed in 1990. MRAs were mostly implemented in the late 1990s/early 2000s. The sample of countries includes all OECD countries for which complete data was available as well as the top 22 manufacture exporting non-OECD countries.<sup>17</sup> The Czech Republic, Poland, Kuwait, and Taiwan were dropped due to insufficient GDP data. In total, the sample consists of 2256 country pairs (48*47) across 18 years.

Bilateral trade data at the 3-digit level (SITC Rev.2) was obtained from the UN’s COMTRADE database. As is standard for analysis of trade flows, bilateral import data was obtained and subsequently converted into bilateral export flows. GDP and population data is from the World Bank’s WDI database, while contiguity, language, colonial and distance variables were obtained from the website of the CEPII. For geographical information, the CIA factbook was consulted. GATT/WTO membership and accession dates are as given on the WTO website. FTAs are those included by Rose (2003). Information on membership in MRAs and harmonization initiatives was obtained from various websites.<sup>18</sup>

# **Implementation**

The empirical analysis is conducted at the sectoral level. The two sectors being analyzed are telecommunications equipment (sample from 1991-2003) and medical devices (sample from 1986-2003) as their coverage by MRAs and harmonization seems widest. The sample contains 8 MRAs on medical devices and 14 on telecommunications equipment. By the end of the sample period, harmonization in the two chosen sectors had been undertaken only among EU members (in medical devices and telecoms equipment) and ASEAN members (in telecoms equipment).

For medical devices, two separate regressions were run in order to account for possibly differing effects of the 1990 and 1993 harmonization directives, which covered active implantable and general medical devices respectively. Impact is expected to be slightly different between sectors due to the differing nature of the standard involved. While the telecommunications standards under investigation were designed to ensure compatibility<sup>19</sup> , standards for medical devices were set to ensure a

> 17 For an exact list please refer to appendix III. Non-OECD countries in the sample are the top 22 countries in the competitive industrial performance (CIP) index published by UNIDO in its 2004 Industrial Development Report. The sample was restricted to only the most competitive developing countries as for others restrictions of manufacturing exports do not necessarily apply. Further, Krugman’s (1980) model which assumes Dixit-Stiglitz monopolistic competition and on which also Melitz (2003) is based only allows for intra-industry trade, whereas trade between OECD countries and LDCs is mostly inter-industry

> 18 For a list of initiatives, please refer to appendix IV and V.

> 19 In this case, it seems that industry was not able to generate a common standard, such that government intervention was necessary

22