Non-tariff Measures and Productivity of Ukrainian Food Processing Firms

Abstract

Using detailed data on veterinary, ecological, sanitary, phytosanitary and mandatory certification measures, this paper studies the effect of non-tariff measures (NTMs) on firm productivity in the food-processing industry through forward and backward linkages. Using quantity and value of output at product level, we calculate and compare quantity- and revenue-based measures of total factor productivity (TFP). Exploiting the episode of NTM liberalisation in Ukraine in 2008–2012, we find that NTMs on intermediate inputs have a negative effect on quantity-based TFP. Other trade policy variables, including input tariffs and output NTMs also negatively influence productivity. The effect on the revenue-based TFP is weaker due to price and quality adjustments. Interacting changes in input NTMs with import intensity prior to trade liberalisation, we find that firms that used imported inputs more intensively tend to have lower long-run TFP growth.