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Trade Patterns and Endogenous Institutions: Global Evidence

In: Product Characteristics in International Economics

Author

Listed:
  • Stephan Huber

    (University of Regensburg)

Abstract

We propose a novel way to measure the rule of law intensity of exports at the goods level based on nearly 100 million disaggregated bilateral trade flows around the globe. We categorize goods into three groups: fragmented, primary, and other. The theoretical literature on hold-up problems connected to incomplete or incompletely enforceable contracts or property rights predicts that goods resulting from fragmented production processes should be the most rule of law intensive. However, we find that the rule of law intensity of other goods is, on average, only slightly lower than that of fragmented goods. We examine how exogenous variation in countries’ trade patterns influences the quality of institutions. Our regressions show that trade flows generated by fragmented and other processes of production improve rule of law, while trade flows generated by primary production do not.

Suggested Citation

  • Stephan Huber, 2018. "Trade Patterns and Endogenous Institutions: Global Evidence," Contributions to Economics, in: Product Characteristics in International Economics, chapter 0, pages 91-120, Springer.
  • Handle: RePEc:spr:conchp:978-3-319-76093-3_4
    DOI: 10.1007/978-3-319-76093-3_4
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    Cited by:

    1. Horváth, Roman & Zeynalov, Ayaz, 2016. "Natural resources, manufacturing and institutions in post-Soviet countries," Resources Policy, Elsevier, vol. 50(C), pages 141-148.
    2. Amiri, Hossein & Samadian, Farzaneh & Yahoo, Masoud & Jamali, Seyed Jafar, 2019. "Natural resource abundance, institutional quality and manufacturing development: Evidence from resource-rich countries," Resources Policy, Elsevier, vol. 62(C), pages 550-560.

    More about this item

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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