Institutions, Trade Policy and Trade Flows

WTO Staff Working Paper No. ERSD-2004-02

26 Pages Posted: 10 Aug 2006

See all articles by Marion Jansen

Marion Jansen

International Trade Centre

Hildegunn Kyvik Nordås

Organization for Economic Co-Operation and Development (OECD)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2004

Abstract

This paper analyses to which extent domestic institutions affect trade flows. We use two complementary approaches, one focusing on the size of total trade flows and one focusing on bilateral trade patterns (gravity equation). Besides, we control for two other domestic policy variables: trade policy and domestic infrastructure. We find that the quality of institutions has a positive and significant impact on a country's level of openness. Domestic tariffs have no statistically significant impact on their own, but do affect total trade flows when combined with good institutions. Domestic institutions also have a positive and significant impact on bilateral trade flows, but the parameter of our institution variables is reduced by almost a half and may turn insignificant when the quality of domestic infrastructure is included in the regression.

Suggested Citation

Jansen, Marion and Nordås, Hildegunn Kyvik, Institutions, Trade Policy and Trade Flows (April 2004). WTO Staff Working Paper No. ERSD-2004-02 , Available at SSRN: https://ssrn.com/abstract=923544 or http://dx.doi.org/10.2139/ssrn.923544

Marion Jansen (Contact Author)

International Trade Centre ( email )

54-56 Rue de Montbrillant
Geneva
Switzerland

Hildegunn Kyvik Nordås

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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