Araujo, Luis, Mion, Giordano and Ornelas, Emanuel (2012) Institutions and export dynamics. Centre for Economic Policy Research, DP8809. Centre for Economic Policy Research, London, UK.Full text not available from this repository.
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.
Actions (login required)
|Record administration - authorised staff only|