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Institutions and export dynamics

Araujo, Luis and Mion, Giordano and Ornelas, Emanuel (2012) Institutions and export dynamics. Centre for Economic Policy Research, DP8809. Centre for Economic Policy Research, London, UK.

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Identification Number: DP8809

Abstract

We study the role of contract enforcement in shaping the dynamics of international trade at the firm level. We develop a theoretical model to describe how agents build reputations to overcome the problems created by weak enforcement of international contracts. We find that, all else equal, exporters start their activities with higher volumes and remain as exporters for a longer period in countries with better contracting institutions. However, conditional on survival, the growth rate of a firm's exports to a country decreases with the quality of the country's institutions. We test these predictions using a rich panel of Belgium exporting firms from 1995 to 2008 to every country in the world. We adopt two alternative empirical strategies. In one specification we use firm-year fixed effects to control for time-varying firm-specific characteristics.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.cepr.org/
Additional Information: © 2012 The Authors
Subjects: H Social Sciences > HB Economic Theory
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > Managerial Economics and Strategy Group
Date Deposited: 12 Jul 2012 14:07
Last Modified: 12 Jul 2012 14:07
URI: http://eprints.lse.ac.uk/id/eprint/44822

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