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Institutions and Trade: Competitors or Complements in Economic Development?

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  • SAMBIT BHATTACHARYYA
  • STEVE DOWRICK
  • JANE GOLLEY

Abstract

This article contributes to the debate over the empirical relationship between trade openness and economic development. Unlike previous studies which treat trade openness and institutions as competitors in economic development, we find evidence that they are in fact complements. We also find that in order for a country to benefit from trade, its institutional quality has to be above a certain threshold level. These results are suggestive of an important complementary role for trade openness and institutions in economic development. Copyright © 2009 The Economic Society of Australia.

Suggested Citation

  • Sambit Bhattacharyya & Steve Dowrick & Jane Golley, 2009. "Institutions and Trade: Competitors or Complements in Economic Development?," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 318-330, September.
  • Handle: RePEc:bla:ecorec:v:85:y:2009:i:270:p:318-330
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    Cited by:

    1. Bhattacharyya, Sambit, 2011. "Five Centuries of Economic Growth in India: The Institutions Perspective," MPRA Paper 67901, University Library of Munich, Germany.
    2. Kuncic, Aljaz, 2012. "Institutional determinants of bilateral trade: Taking another look," Kiel Advanced Studies Working Papers 462, Kiel Institute for the World Economy (IfW).
    3. L. Alan Winters & Antonio Martuscelli, 2014. "Trade Liberalization and Poverty: What Have We Learned in a Decade?," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 493-512, October.
    4. Bhattacharyya, Sambit, 2012. "Trade liberalization and institutional development," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 253-269.
    5. Costantini, Valeria & Liberati, Paolo, 2014. "Technology transfer, institutions and development," Technological Forecasting and Social Change, Elsevier, vol. 88(C), pages 26-48.
    6. Li, Kui-Wai, 2011. "The Optimal Level and Impact of Internal Factors on Growth," MPRA Paper 36419, University Library of Munich, Germany.
    7. Kim, Dong-Hyeon & Lin, Shu-Chin & Suen, Yu-Bo, 2013. "Investment, trade openness and foreign direct investment: Social capability matters," International Review of Economics & Finance, Elsevier, vol. 26(C), pages 56-69.

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    JEL classification:

    • F1 - International Economics - - Trade
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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