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How important are non-tariff barriers? Complementarity of infrastructure and institutions of trading partners

  • Zsoka Koczan

    (University of Cambridge)

  • Alexander Plekhanov

    ()

    (EBRD)

The paper provides an empirical analysis of the importance of infrastructure for bilateral trade flows using an augmented gravity model of trade. The estimates suggest that potential gains from improvements in infrastructure are large and far exceed the effects of lowering tariff barriers. Moreover, the effect of improving hard infrastructure on trade flows in a particular country increases with the quality of infrastructure of trading partners. Similar complementarity is observed for control of corruption, with a large asymmetry of effects, where institutions in the destination market seem to be considerably more important.

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Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 159.

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Length: 21 pages
Date of creation: Jul 2013
Date of revision:
Publication status: Published in Working papers 159, European Bank for Reconstruction and Development
Handle: RePEc:ebd:wpaper:159
Contact details of provider: Postal: One Exchange Square, London EC2A 2JN
Web page: http://www.ebrd.com/pages/research/publications/workingpapers.shtml

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