Trade and Harmonization : If Your Institutions are Good, Does it Matter if They are Different ?

Islam, RoumeenReshef, Ariell2012-06-212012-06-212006-05https://hdl.handle.net/10986/8678Good institutional quality (function) and similar institutional design (form) can promote international trade by reducing transactions costs. The authors evaluate the relative importance of function versus form in a gravity model, using an indicator of different legal systems as a proxy for differences in form, together with indicators of overall institutional quality. They find that good institutions promote trade much more than similar legal systems and have much more explanatory power. This effect is economically large-up to 10 times the effect of different legal systems. Moreover, better infrastructure matters as much as good institutions.CC BY 3.0 IGOAGRICULTUREAUTHORITYBILATERAL TRADECIVIL LAWCIVIL LAW SYSTEMSCOMMON LAWCOMPARATIVE ADVANTAGECOMPETITION LAWCONSUMER PREFERENCESCONTROLCONTROL OF CORRUPTIONCORRUPTIONCUSTOMSCUSTOMS PROCEDURESDECENTRALIZATIONECONOMIC OUTCOMESECONOMICS LITERATUREELASTICITYEUROPEAN UNIONEXPORTSEXTERNALITIESFACE VALUEFEDERALISMFINANCIAL SECTORFREE TRADEGATTGDPGDP PER CAPITAGENERAL SYSTEM OF PREFERENCESGOVERNMENT SUBSIDIESINDUSTRIALIZED COUNTRIESINFORMAL INSTITUTIONSINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY RIGHTSINTERNATIONAL AGREEMENTSINTERNATIONAL TRADELANDLOCKED COUNTRIESLAWSLEGAL DEVELOPMENTLEGAL LITERATURELEGAL PROCEDURESLEGAL RECOURSELEGAL SYSTEMLEGAL SYSTEMSLEGISLATIONLESS DEVELOPED COUNTRIESMARKET ACCESSMARKET SHAREPOLICY RESEARCHPOSITIVE EFFECTSPRICE LEVELSPRIVATE PROPERTYPROPERTY RIGHTSQUALITYREDISTRIBUTIONREGIONAL TRADEREGIONAL TRADE AGREEMENTSSHIPMENTSSUFFICIENT EVIDENCESYSTEM OF PREFERENCESTRADE AGREEMENTSTRADE FLOWSTRANSACTIONS COSTSTRANSITION ECONOMIESWTOTrade and Harmonization : If Your Institutions are Good, Does it Matter if They are Different ?World Bank10.1596/1813-9450-3907