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How Important is State Enforcement for Trade?

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  • Peter T. Leeson

Abstract

According to conventional wisdom, state-provided contract enforcement is critical to an expansive, growing trade. This paper estimates state enforcement's impact on international trade for one hundred and fifty-seven countries over the last half a century. I find that state enforcement increases trade between nations by about fifteen to thirty-eight percent. This effect is significant though modest compared to intuition about the importance of government enforcement, the long-run growth of trade, and the estimated effect of trade's other determinants. Thus, while state enforcement appears to enhance trade, it does so less impressively than its status as essential for flourishing trade tends to suggest. Copyright 2008, Oxford University Press.

Suggested Citation

  • Peter T. Leeson, 2008. "How Important is State Enforcement for Trade?," American Law and Economics Review, Oxford University Press, vol. 10(1), pages 61-89.
  • Handle: RePEc:oup:amlawe:v:10:y:2008:i:1:p:61-89
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    File URL: http://hdl.handle.net/10.1093/aler/ahn003
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    Cited by:

    1. Leeson, Peter T. & Boettke, Peter J., 2009. "Two-tiered entrepreneurship and economic development," International Review of Law and Economics, Elsevier, vol. 29(3), pages 252-259, September.
    2. Leeson Peter T. & Williamson Claudia R., 2009. "Anarchy and Development: An Application of the Theory of Second Best," The Law and Development Review, De Gruyter, vol. 2(1), pages 77-96, July.
    3. Jens Prüfer, 2016. "Business Associations and Private Ordering," Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(2), pages 306-358.
    4. Andrew K. Rose, 2011. "GATT/WTO Membership and its Effect on Trade: Where Do We Stand?," Chapters,in: International Handbook on the Economics of Integration, Volume III, chapter 18 Edward Elgar Publishing.
    5. Edward Stringham, 2014. "Extending the Analysis of Spontaneous Market Order to Governance," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(2), pages 171-180, June.
    6. Leeson, Peter T., 2011. "Government, clubs, and constitutions," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 301-308.
    7. repec:eee:respol:v:47:y:2018:i:6:p:1096-1110 is not listed on IDEAS
    8. Benjamin Powell & Edward Stringham, 2009. "Public choice and the economic analysis of anarchy: a survey," Public Choice, Springer, vol. 140(3), pages 503-538, September.
    9. Scott E. Masten & Jens Prüfer, 2014. "On the Evolution of Collective Enforcement Institutions: Communities and Courts," The Journal of Legal Studies, University of Chicago Press, vol. 43(2), pages 359-400.
    10. Bo Chen & Yao Li, 2014. "Analyzing Bilateral Trade Barriers under Global Trade Context: A Gravity Model Adjusted Trade Intensity Index Approach," Review of Development Economics, Wiley Blackwell, vol. 18(2), pages 326-339, May.
    11. Stringham, Edward Peter, 2011. "Embracing morals in economics: The role of internal moral constraints in a market economy," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 98-109, April.
    12. Peter T. Leeson, 2010. "Anarchy Unbound: How Much Order Can Spontaneous Order Create?," Chapters,in: Handbook on Contemporary Austrian Economics, chapter 10 Edward Elgar Publishing.
    13. Adam Smith & David Skarbek & Bart Wilson, 2012. "Anarchy, groups, and conflict: an experiment on the emergence of protective associations," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(2), pages 325-353, February.
    14. Peter J. Boettke (ed.), 2010. "Handbook on Contemporary Austrian Economics," Books, Edward Elgar Publishing, number 12822.
    15. Adam Martin, 2010. "The Analects of Boettke," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 26(Fall 2010), pages 125-141.

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