Trade liberalization and institutional development

Bhattacharyya, Sambit (2012) Trade liberalization and institutional development. Journal of Policy Modeling, 34 (2). pp. 253-269. ISSN 0161-8938

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Recent research shows that the majority of cross-national variation in institutions is related to history. The within variation however is somewhat less explored. Using panel data covering the periods 1865 – 1940 and 1980 – 2000 & 31 and 103 countries respectively, we find that the within variation in economic institutions (namely property rights and contracts) can be explained by trade liberalization. To address endogeneity concern we use export partner growth and rainfall as instruments for trade liberalization and log GDP per capita respectively and estimate our model using Limited Information Maximum Likelihood (LIML) Fuller estimation method. Our basic result holds after controlling for country fixed effects, time varying common shocks, and various additional covariates. It is also robust to various alternative measures of liberalization and institutions, as well as across different samples.

Item Type: Article
Schools and Departments: University of Sussex Business School > Economics
Subjects: H Social Sciences > HD Industries. Land use. Labour > HD0072 Economic development. Development economics. Economic growth
Depositing User: Sambit Bhattacharyya
Date Deposited: 02 May 2012 08:18
Last Modified: 02 Jul 2019 21:03

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