Trade Preferences that Promote Sustainable Development: A Comparative Analisys of the EU GSP+ in Bolivia, Nicaragua , and Honduras

Preferential tariff schemes have been historically granted to developing countries to enhance their economic growth and foster development. The EU has expanded this framework through the GSP+, which offers enhanced preferences to countries that commit to sustainable development and good governance by ratifying twenty-seven international conventions on human and labour rights, environmental protection, and good governance. Considering this, this research aims to evaluate the impact of the EU GSP+ on sustainable development by analysing its effects on export growth, export diversification, and progress towards the SDGs, in Bolivia, Nicaragua, and Honduras from 2005 to 2022. The analysis evaluates these countries' exports relative to their GDP, employs the Herfindahl-Hirschman Index to assess export diversification, and compares their progress towards achieving SDGs with global trends. The results indicate that, as a GSP+ beneficiary, Bolivia experienced a slight increase in exports to the EU but also exhibited a rise in export concentration. In contrast, Nicaragua and Honduras achieved greater diversification as GSP+ beneficiaries, although their exports to the EU declined. Concerning social and environmental progress, the three countries demonstrated advancements towards SDGs while benefiting from the GSP+.