Does Governance Matter for Enhancing Trade? Empirical Evidence from Asia
AbstractThe primary objective of this paper is to find whether or not the governance and institutions matter for enhancing Asias trade. In this study, we have performed a comprehensive empirical analysis of the linkages between governance and trade at the Asian subregional level. Our results indicate that all individual governance indicators except regulatory quality have significant impact on trade in Asia, of which government effectiveness is the most crucial for Asias trade promotion. One of the conclusions of this paper is that soft infrastructure such as the institutions and governance are important for enhancing Asias trade. In other words, good governance and institutions help unlock trade potential of a region (or a nation). Improved governance, particularly at the sectoral level, can carry huge payoffs at a time when Asia is planning to pursue a free trade for the entire region. Ignoring governance weaknesses can stultify economic returns to free trade. Therefore, more effective policy approaches toward improved governance are needed to complement the regional trade policy in Asia and beyond.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Governance Working Papers with number 22792.
Date of creation: Jan 2010
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Governance; institutions; trade; Asia;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
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