Institutional Quality and International Trade
IMF Working Papers, December 1, 2004
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- Institutional Quality and International Trade
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Bibliographic details
- Authors: Andrei A Levchenko
- Published: December 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451875560.001
Overview and Purpose
- The paper studies consequences of trade when institutional differences (quality of contract enforcement, property rights, shareholder protection, and the like) are the source of comparative advantage among countries.
- Institutional differences are modeled within the Grossman-Hart-Moore framework of contract incompleteness.
- Twofold purpose:
- Theoretical analysis of trade driven by institutional differences.
- Empirical assessment of the "institutional content of trade."
Key Findings (theoretical)
- The less developed country may not gain from trade.
- Factor prices may actually diverge as a result of trade.
- Institutional differences as the source of comparative advantage can produce nonstandard trade outcomes relative to conventional models.
Key Findings (empirical)
- Institutional differences are shown to be important determinants of trade flows (evidence of "institutional content of trade").
Subjects and Keywords
- Subjects: Capital productivity, Comparative advantage, Imports, International trade, Labor, Production, Trade balance
- Keywords: base wage, capital abundance, capital intensity, Capital productivity, Comparative advantage, Global, Imports, incomplete contracts, institutions, labor interest group, physical capital, Trade balance, trade economist, trade equilibrium, trade methodology, trade opening, trade outcome, trade pattern, Trade patterns, trade value, trade volume, WP
Content in this bundle
- Institutional Quality and International Trade, Andrei Levchenko, IMF Working Paper No. 04/231