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Institutions and Trade: Competitors or Complements in Economic Development?

  • SAMBIT BHATTACHARYYA
  • STEVE DOWRICK
  • JANE GOLLEY

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.

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Article provided by The Economic Society of Australia in its journal Economic Record.

Volume (Year): 85 (2009)
Issue (Month): 270 (09)
Pages: 318-330

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Handle: RePEc:bla:ecorec:v:85:y:2009:i:270:p:318-330
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