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Redirecting International Trade: Contracts, Conflicts, and Institutions

The global financial crisis has accelerated the redirection of trade towards new markets, outside the OECD area, where both demand patterns and the institutional environment differ from those in the OECD. This study provides an empirical examination of the consequences of this shift. Results suggest that weak institutions hamper trade and reduces the length of trade relations, especially for small firms. Furthermore, trade in industries that are characterized by a high degree of trade conflicts and that requires extensive relationship specific investments for trade to occur are comparatively difficult to redirect towards markets with weak institutions.

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Paper provided by The Ratio Institute in its series Ratio Working Papers with number 226.

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Length: 33 pages
Date of creation: 04 Dec 2013
Date of revision:
Handle: RePEc:hhs:ratioi:0226
Contact details of provider: Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
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