Contractual Frictions and the Margins of Trade

Azomahou, Theophile T. ; Maemir, Hibret B. ; Wako, Hassen A.

World Bank, Washington, DC

关键词: COMPARATIVE ADVANTAGE;    INSTITUTIONS;    CONTRACTS;    EXPORT;    MARGIN OF TRADE;   

DOI  :  10.1596/1813-9450-8631
RP-ID  :  WPS8631

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

A growing body of work has shown thatthe quality of national institutions that enforce writtencontracts plays an important role in shaping acountry's comparative advantage. Using highlydisaggregated bilateral and unique harmonized firm-leveltrade data across a large number of countries, this papercontributes to this literature by providing a comprehensiveanalysis of the mechanisms through which institutionalfrictions affect the pattern of aggregate trade flow,distinguishing the effects on the intensive and extensivemargins. The analysis finds that contractual frictiondistorts countries' trade pattern beyond its effect ondomestic production structure, by deterring the probabilityof exporting (the extensive margin) and export sales afterentry (the intensive margin), particularly in industriesthat rely more heavily on relationship-specific inputs (morevulnerable to holdup problems). The analysis also finds thatcontractual frictions matter more for the intensive marginthan the extensive margin of exporting. In addition, bettercontracting institutions increase the probability ofsurvival of new export products in more contract-intensiveindustries. These results have important policy implicationsfor developing countries that seek to boost export growthbut many of which suffer from poor contracting institutions.