This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

The Institutional Determinants of Bilateral Trade Patterns

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Henri L. F. de Groot
Gert-Jan Linders
Piet Rietveld
Uma Subramanian

Additional information is available for the following registered author(s):

Abstract

This paper studies the effect of institutions on trade flows, using a gravity model approach. Standard gravity equations incorporate factors such as geographical proximity, language, trade policy and common history as explanatory factors for variation in bilateral trade that reflect the costs of trade across geographical and cultural distance. We extend this type of analysis by focusing on the relevance of the quality of governance and the extent of familiarity with the resulting framework of rules and norms in explaining variation in bilateral trade patterns. More specifically, we test whether institutional homogeneity and institutional quality have an independent impact on the trade volume between pairs of countries. We find that having a similar institutional framework promotes bilateral trade by 13%, on average. Furthermore, a better quality of formal institutions tends to coincide with more trade. Depending on being either importer or exporter, an increase in overall institutional quality of one standard deviation from the mean leads to an estimated increase of 30-44% in bilateral trade. Copyright WWZ and Helbing & Lichtenhahn Verlag AG 2004.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.0023-5962.2004.00245.x
File Format: text/html
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by Blackwell Publishing in its journal Kyklos.

Volume (Year): 57 (2004)
Issue (Month): 1 (02)
Pages: 103-123
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:bla:kyklos:v:57:y:2004:i:1:p:103-123

Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0023-5962

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Maurice Obstfeld & Kenneth Rogoff, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Working Papers 7777, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December. [Downloadable!] (restricted)
  3. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Koukhartchouk, Oxana & Maurel, Mathilde, 2003. "Accession to the WTO and EU Enlargement: What Potential for Trade Increase?," CEPR Discussion Papers 3944, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. North, Douglass C, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter. [Downloadable!] (restricted)
  6. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-83, May. [Downloadable!] (restricted)
  7. Shang-Jin Wei, 2000. "Natural Openness and Good Government," NBER Working Papers 7765, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Jeffrey Frankel & Andrew Rose, 2002. "An Estimate Of The Effect Of Common Currencies On Trade And Income," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 437-466, May. [Downloadable!] (restricted)
    Other versions:
  9. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June. [Downloadable!] (restricted)
  10. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476.
  11. James E. Anderson & Douglas Marcouiller, 2002. "Insecurity And The Pattern Of Trade: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 342-352, May. [Downloadable!] (restricted)
    Other versions:
  12. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  13. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters, in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  14. Jeffrey A. Frankel & David Romer, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. A.M. Lejour & R.A. de Mooij & C.H. Capel, 2004. "Assessing the economic implications of Turkish accession to the EU," CPB Documents 56, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  2. Matilde Bombardini & Giovanni Gallipoli & Germán Pupato, 2009. "Skill Dispersion and Trade Flows," NBER Working Papers 15097, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Mina Yakop & Peter A.G. van Bergeijk, 2009. "The weight of economic and commercial diplomacy," Working Papers - General Series 478, Institute of Social Studies. [Downloadable!]
  4. Subramanian, Uma & Anderson, William P. & Lee, Kihoon, 2005. "Measuring the impact of the investment climate on total factor productivity : the cases of China and Brazil," Policy Research Working Paper Series 3792, The World Bank. [Downloadable!]
  5. Gert-Jan Linders, 2004. "The Effect of Domestic Institutions on International Trade Flows: A sectoral analysis," ERSA conference papers ersa04p357, European Regional Science Association. [Downloadable!]
  6. Bjørnskov, Christian, 2005. "Political Ideology and Economic Freedom," Working Papers 05-8, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
  7. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2009. "Product complexity, quality of institutions and the pro-trade effect of immigrants," PSE Working Papers 2009-06, PSE (Ecole normale supérieure). [Downloadable!]
    Other versions:
  8. Aditya Bhattacharjea, 2004. "IMPERIAL LEGACY The Persistence of Colonial Trade Patterns," Working papers 126, Centre for Development Economics, Delhi School of Economics. [Downloadable!]
  9. Arjan Lejour & Andrea Mervar & Gerard Verweij, 2007. "The Economic Effects of Croatia's Accession to the EU," Working Papers 0705, The Institute of Economics, Zagreb. [Downloadable!]
    Other versions:
  10. Arjan M. Lejour & Ruud de Mooij, 2004. "Turkish Delight – Does Turkey’s accession to the EU bring economic benefits?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  11. Simon Guttmann & Anthony Richards, 2004. "Trade Openness: An Australian Perspective," RBA Research Discussion Papers rdp2004-11, Reserve Bank of Australia. [Downloadable!]
    Other versions:
  12. Gert-Jan M. Linders & Henri L.F. de Groot & Piet Rietveld, 2005. "Institutional Determinants of Bilateral Trade: An Analysis according to Product Type," Tinbergen Institute Discussion Papers 05-023/3, Tinbergen Institute. [Downloadable!]
  13. Nathan Nunn, 2005. "Relationship Specificity, Incomplete Contracts and the Pattern of Trade," International Trade 0512018, EconWPA. [Downloadable!]
    Other versions:
  14. Arjan Lejour & J.W. de Paiva Verheijden, 2004. "Services trade within Canada and the European Union. What do they have in common?," CPB Discussion Papers 42, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  15. Amin, Mohammad & Mattoo, Aaditya, 2006. "Do institutions matter more for services ?," Policy Research Working Paper Series 4032, The World Bank. [Downloadable!]
  16. Henri L.F. de Groot & Gert-Jan Linders & Piet Rietveld, 2003. "Why do OECD-Countries trade more?," Tinbergen Institute Discussion Papers 03-092/3, Tinbergen Institute. [Downloadable!]
  17. Das, Gouranga Gopal & Andriamananjara, Soamiely, 2004. "Hub-and-Spokes Free-Trade-Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere," Working Papers 15870, United States International Trade Commission, Office of Economics. [Downloadable!]
  18. Arjan Lejour & Vladimir Solanic & Paul Tang, 2006. "EU accession and income growth: an empirical approach," CPB Discussion Papers 72, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
    Other versions:
  19. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "Cultural Biases in Economic Exchange?," Economics Working Papers ECO2007/42, European University Institute. [Downloadable!]
    Other versions:
  20. Henk Kox & Arjan Lejour & Raymond Montizaan, 2004. "The free movement of services within the EU," CPB Documents 69, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  21. Gert-Jan M. Linders & Arjen Slangen & Henri L.F. de Groot & Sjoerd Beugelsdijk, 2005. "Cultural and Institutional Determinants of Bilateral Trade Flows," Tinbergen Institute Discussion Papers 05-074/3, Tinbergen Institute. [Downloadable!]
  22. Frank A.G. den Butter & Christiaan Pattipeilohy, 2007. "Productivity Gains from Offshoring: an Empirical Analysis for the Netherlands," Tinbergen Institute Discussion Papers 07-089/3, Tinbergen Institute. [Downloadable!]
Statistics
Access and download statistics

Did you know? Over 1000 institutions contribute their bibliographic data directly to this service.

This page was last updated on 2009-11-5.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.