International trade and institutional change
By: Andrei A. Levchenko
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 17675; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17675.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper analyzes the impact of international trade on the quality of institutions, such as contract enforcement, property rights, or investor protection.  It presents a model in which imperfect institutions create rents for some parties within the economy, and are a source of comparative advantage in trade.  Institutional quality is determined as an equilibrium of a political economy game.  When countries share the same technology, there is a "race to the top'' in institutional quality: irrespective of country characteristics, both trade partners are forced to improve institutions after opening.  On the other hand, domestic institutions will not improve in either country when one of the countries has a strong enough technological comparative advantage in the institutionally intensive good.  We provide empirical evidence for a related cross-sectional prediction of the model.  Countries whose exogenous geographical characteristics predispose them to exporting in institutionally intensive sectors exhibit significantly higher institutional quality"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 2/14/2012.

Includes bibliographical references.

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