Estimating the Ad Valorem Equivalents of the Non-tariff Measures: Focusing on Cross-Border Trade in Goods and Services

(NTMs) in cross-border trade in 57 globally traded goods and services. We focus on estimating the AVEs of NTM between Kenya and Korea and the rest of the world economies aggregated into 14 regions. Design/Methodology/Approach Bilateral trade data is from the Global Trade Analysis Project database version 9;with a base year of 2011. Using the quantity-based border approach (McCallum;1995);we apply the gravity model by Anderson and van WinCoop (2003/2004);in which bilateral prices of commodities are endogenized. To estimate the country-specific bilateral tariff equivalents;we aggregate the 57 GTAP sectors into one sector. We quantify sector-specific AVEs of NTMs on 42 goods and 14 services sectors. Calculating AVEs of NTMs;we utilize the export trade border coefficients and the elasticity of substitution between traded goods. Findings Empirical evidence confirms that agricultural sectors show higher AVEs of NTMs when compared to the manufacturing and services sectors;while trading blocs have relatively lower trade barriers. Furthermore;the study finds no correlation between the level of economic development and NTMs imposed. Additionally;the supply-pull has a higher effect on sectoral trade than the demand-pull. Research Implications Our contribution to the literature on the estimation of non-tariff measures is in the form of a new dataset that is comprehensive in terms of the variables applied;sectors analyzed;and regions covered. According to the authors’ knowledge;this is the first study to calculate tariff equivalents between Kenya and Korea. Ad Valorem Tariff Equivalents;Kenya;Korea;Multilateral Resistance Terms;Non-Tariff Measures