- University of Innsbruck
Wednesday, September 30, 2015
Aula Seminari, Vicolo Campofiore 2
In 2003, the Kimberly Process Certification Scheme (KPCS) went into force to stop the trade in those diamonds which are directly linked to the fueling of armed conflict and activities of rebel movements, also known as conflict diamonds. Using a structural gravity equation which is estimated by a Heckman's sample selection procedure, this article analyzes the impact of the KPCS on international trade in rough diamonds. We find that the KPCS has a strong significant impact on the extensive margin of rough diamonds trade. We also find that conflicts in the exporting country or both countries independently significantly increases the trade volume of rough diamonds. Further, the regression results reveal that trade in diamonds stemming from belligerent exporters is reduced once the importer agreed upon the KPCS, whereas we find mixed evidence in the case the exporter signs the KPCS. This suggests that the KPCS is only partly effective in reducing the amount of internationally traded conflict diamonds.