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Trade Liberalization And Institutional Development

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  • Sambit Bhattacharyya

Abstract

Recent research shows that the majority of cross-national variation in institutions is related to history. The within variation however is somewhat less explored. We find that the within variation in economic institutions can be explained by trade liberalization. This relationship is robust with various indicators of liberalization, in different sub-samples, and to the inclusion of additional covariates. Short-run trade liberalization appears to be more important than long-run trade liberalization. This may be indicative of a short-term trade liberalization induced shift in the long-run institutional equilibrium. We also find that the country fixed effects are highly correlated with settler mortality and other historical variables. This is consistent with recent theoretical developments in the political economy literature and with the ‘critical juncture’ view of history.

Suggested Citation

  • Sambit Bhattacharyya, 2008. "Trade Liberalization And Institutional Development," Departmental Working Papers 2008-13, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2008-13
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    Cited by:

    1. Bhattacharyya, Sambit, 2011. "Five Centuries of Economic Growth in India: The Institutions Perspective," MPRA Paper 67901, University Library of Munich, Germany.
    2. Bergh, Andreas & Mirkina, Irina & Nilsson, Therese, 2013. "More Open – Better Governed? Evidence from High- and Low-income Countries," Working Paper Series 997, Research Institute of Industrial Economics.
    3. Feifei Wu & Xinyu Yan, 2018. "Institutional Quality and Sustainable Development of Industries’ Exports: Evidence from China," Sustainability, MDPI, Open Access Journal, vol. 10(11), pages 1-22, November.
    4. Khalid, Usman, 2015. "Why Trading with Dictators May Nevertheless Help the People: On the Interplay between Trade, Political Regimes and Economic Institutions," Working Papers 2015:15, Lund University, Department of Economics, revised 23 Jul 2015.
    5. Thabo Gerald Maleka & Gibson Nyirenda & Michael Bamidele Fakoya, 2017. "The Relationship between Waste Management Expenditure and Waste Reduction Targets on Selected JSE Companies," Sustainability, MDPI, Open Access Journal, vol. 9(9), pages 1-20, August.
    6. Sena Kimm Gnangnon, 2019. "Remittances Inflows and Trade Policy," Remittances Review, Transnational Press London, UK, vol. 4(2), pages 117-142, October.
    7. Reddy, Kotapati Srinivasa & Nangia, Vinay Kumar & Agrawal, Rajat, 2013. "Indian economic-policy reforms, bank mergers, and lawful proposals: The ex-ante and ex-post ‘lookup’," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 601-622.
    8. Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, vol. 28(1), pages 132-146.
    9. Diana Patricia Niño Muñoz, 2015. "Calidad de vida y el desarrollo institucional de los municipios petroleros de Colombia (2000-2010)," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 17(33), pages 203-230, July-Dece.
    10. Audrey Menard, 2012. "Why foreign aid does (not) improve democracy?," Working Papers of BETA 2012-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    11. Manwa, Farai & Wijeweera, Albert & Kortt, Michael A., 2019. "Trade and growth in SACU countries: A panel data analysis," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 107-118.
    12. Sena Kimm Gnangnon, 2020. "A Note on the Algebra of Multiple Exchange Rates," Economics Bulletin, AccessEcon, vol. 40(1), pages 316-337.
    13. Uddin, Moshfique & Chowdhury, Anup & Zafar, Sheeba & Shafique, Sujana & Liu, Jia, 2019. "Institutional determinants of inward FDI: Evidence from Pakistan," International Business Review, Elsevier, vol. 28(2), pages 344-358.
    14. Kant, Chander, 2016. "Are institutions in developing countries malleable?," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 272-289.
    15. Wil Martens & Prem Yapa & Maryam Safari, 2021. "Earnings Management in Frontier Market: Do Institutional Settings Matter?," Economies, MDPI, Open Access Journal, vol. 9(1), pages 1-19, February.
    16. Sambit Bhattacharyya, 2020. "A History of Global Capitalism: Feuding Elites and Imperial Expansion," Working Paper Series 1020, Department of Economics, University of Sussex Business School.
    17. Manwa, Farai & Wijeweera, Albert, 2016. "Trade liberalisation and economic growth link: The case of Southern African Custom Union countries," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 12-21.

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    More about this item

    Keywords

    Trade Liberalization; Institutions; Economic Development;
    All these keywords.

    JEL classification:

    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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