The relationship between institutional quality and trade in Pacific Island countries

Azmat Gani, Biman Chand Prasad

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Purpose The purpose of this paper is to examine the export, import, and total trade determinants using reduced form equations for six Pacific Island countries (PICs) with an institutional focus. Design/methodology/approach A fixed effects model, controlling for AR(1) errors, using panel data for selected PICs is utilized. Controlling for common determinants of trade, four indicators of institutional quality: government effectiveness; rule of law; regulatory quality; and control of corruption are tested. Findings The empirical results indicate that improvements in institutional quality variables matter for improved levels of trade. The results also provide confirmation that the appreciation of currency does not significantly harm trade; higher levels of technological diffusion are vital for improved trade; and that gradual liberalization of trade through tariff reduction strongly facilitates more trade. Practical implications This study clearly points out that the institutional quality in the selected countries is a significant factor in determining the level of trade. Originality/value This paper expresses the view that institutions matter for enhanced trade.

Original languageEnglish
Pages (from-to)123-138
Number of pages16
JournalJournal of International Trade Law and Policy
Volume7
Issue number2
DOIs
Publication statusPublished - Dec 5 2008

Fingerprint

determinants
constitutional state
currency
corruption
import
liberalization
Institutional quality
Pacific Islands
methodology
Values

Keywords

  • Governance
  • Organizations
  • Pacific region
  • Trade

ASJC Scopus subject areas

  • Industrial relations
  • Political Science and International Relations
  • Economics, Econometrics and Finance(all)
  • Law

Cite this

The relationship between institutional quality and trade in Pacific Island countries. / Gani, Azmat; Chand Prasad, Biman.

In: Journal of International Trade Law and Policy, Vol. 7, No. 2, 05.12.2008, p. 123-138.

Research output: Contribution to journalArticle

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