Application of Chow Test to Estimate the Effect of Mutual Recognition Agreements

This article presents the research results on Mutual Recognition Agreement effect on the volume of exports – imports of the countries (parties) in the context of the EU – Israel Mutual Recognition Agreement. The authors used the Chow test to obtain the results. The article shows that there is no good reason to believe that Mutual Recognition Agreements boost the volume of mutual trade, at least, of pharmaceutical products. In other words, Mutual Recognition Agreements do not contribute to the growth in the number of exporters. It is concluded that the primary effect of such agreements is to facilitate conformity assessment procedures.