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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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    More about this item

    Keywords

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

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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