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Dynamic Effects of Institutions on Firm-Level Exports

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The gap between theoretically predicted trade patterns and actual trade suggests that our understanding of what shapes trade patterns is incomplete. Institutional barriers may be one factor behind this gap and recent research suggests that institutions are a greater obstacle to trade than are tariffs. Using detailed firm-level data, we analyze how institutional quality in recipient countries affects exports by Swedish firms. Our results suggest that weak institutions hamper exports and that firms that successfully maintain long-term exports do so by starting small and successively increase exports as they learn to know the target market.

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Paper provided by The Ratio Institute in its series Ratio Working Papers with number 184.

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Length: 39 pages
Date of creation: 08 Feb 2012
Handle: RePEc:hhs:ratioi:0184
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