Institutional Determinants of Bilateral Trade Flows: A Panel Data Analysis
Keywords:ECO, Bilateral Trade Flows, Panel Data, Institutional Quality, Institutional Homogeneity, Gravity Trade Model
This study analyzes the institutional determinants of bilateral trade flows and homogeneity effect for Pakistan with ECO countries by using panel data for years 2003-2014. Gravity trade model is estimated through panel least squares technique. Impact of institutions is very important for international trade as international businesses involve many governance systems. The results show that average impact of institutional quality and bilateral trade flows is positive. Moreover, institutional homogeneity effect exhibits that bilateral trade flows are positively related with the governance similarity. Thus, institutional quality and institutional homogeneity has dominant impact on the bilateral trade flows.
Achakzai, J. K. (2006). Intra-ECO trade: a potential region for Pakistan's future trade. The Pakistan Development Review, 45(3), 425-437.
Álvarez, I. C., Barbero, J., Rodríguez-Pose, A., & Zofío, J. (2015). Does institutional quality matter for trade? Institutional conditions in a sectoral trade frame. Centre for Economic Policy Research, Discussion Paper No. 10876.
Amini, M.H. (2014). ECO Statistical Report, ECO Trade. ECO Secretariat. Directorate for Project, Economic Reasearch and Statistics. Statistics, 31-40.
Bergstrand, J. H. (1989). The generalized gravity equation, monopolistic competition, and the factor-proportions theory in international trade. The Review of Economics and Statistics, 143-153.
Bojnec, Š., & Fert?, I. (2015). Institutional determinants of agro-food trade. Transformations in Business &
Anderson, J. E. (1979). A theoretical foundation for the gravity equation. The American Economic Review, 69(1), 106-116.
Anderson, J. E., & Van Wincoop, E. (2003). Gravity with gravitas: a solution to the border puzzle. The American Economic Review, 93(1), 170-192.
Anderson, J. E., & Marcouiller, D. (2002). Insecurity and the pattern of trade: An empirical investigation. Review of Economics and Statistics, 84(2), 342-352.
Anderson, J. E. (2008). Trade and informal institutions. Handbook of International Trade. Blackwell Publishing, Oxford, 279-293.
Beckerman, W. (1956). Distance and the pattern of intra-European trade. The Review of Economics and
Economics, 14(2), 35-52.
Clarete, R., Edmonds, C., & Wallack, J. S. (2003). Asian regionalism and its effects on trade in the 1980s and 1990s. Journal of Asian Economics, 14(1), 91-129.
De Groot, H. L., Linders, G. J., Rietveld, P., & Subramanian, U. (2004). The institutional determinants of bilateral trade patterns. KYKLOS, 57(1), 103-123.
De Jong, R. M., & Sakarya, N. (2016). The econometrics of the Hodrick-Prescott Filter. Review of Economics and Statistics, 98(2), 310-317.
Doumbe, E. D., & Belinga, T. (2015). A Gravity model analysis for trade between Cameroon and Twenty-Eight European Union countries. Open Journal of Social Sciences, 3(08), 114.
Frankel, J. A., & Romer, D. (1999). Does trade cause growth?. American Economic Review, 89(3), 379-399.
Greene, W. H. (2003). Econometric analysis. Pearson Education India.
Gujarati, D. N. (2009). Basic econometrics. Tata McGraw-Hill Education.
Helliwell, J. (1997). National Borders, Trade and Migration. NBER Working Papers 6027.
Indicators, W. G. (2015). The World Bank Group. The World Bank Group.
Isard, W., & Peck, M. J. (1954). Location theory and international and interregional trade theory. The Quarterly Journal of Economics, 97-114.
Kaufmann, D., Kraay, A., & Zoido-Lobaton, P. (2002). Governance Matters II: Updated Indicators for 2000/01, World Bank. Policy Research Working Paper, 2772.
Khan, S., Haq, I., & Khan, D. (2013). An empirical analysis of Pakistan’s bilateral trade: A gravity model approach. The Romanian Economic Journal,16(48), 103-120.
Koukhartchouk, O., & Maurel, M. (2003). Accession to the WTO and EU enlargement: What potential for trade increase?. Centre for Economic Policy Research. Discussion Paper, 3944.
Kraay, A., Mastruzzi, M., & Kaufmann, D. (2004). Governance Matters III: Governance Indicators for 1996-2002. World Bank Publications.
Krugman, P. R. (2012). International economics: Theory and policy, 9/E. Pearson Education India.
Leamer, E. (1993). U.S. Manufacturing and an Emerging Mexico. North American Journal of Economics and Finance, 4(1): 51–89.
Leamer, E. E. (2007). A flat world, a level playing field, a small world after all, or none of the above? A review of Thomas L. Friedman's the World is flat. Journal of Economic Literature, 45(1), 83-126.
McCallum, J. (1995). National borders matter: Canada-US regional trade patterns. The American Economic Review, 85(3), 615-623.
Malik, S., & Chaudhary A.R. (2012). The structure and behavior of Pakistan’s imports from selected Asian countries: An application of Gravity model. Pak. J. Commer. Soc. Sci., 6(1), 53-66.
Mankiw, N. G. (2014). Principles of Macroeconomics. Cengage Learning.
Mayer, T., & Zignago, S. (2011). Notes on CEPII’s distances measures: The GeoDist database.
Mohmand, Y.T., & Wang, A. (2013). The Gravity of Pakistan’s export performance in stratified sampling. Pak. J. Statist, 29(2), 203-216.
Mukhanov, M. (2013). Perspectives of Intra-regional trade in ECO countries.Economic Research Institute. Ministry of Economy and Budget Planning of the Republic of Kazakhstan.
Nasiri, N., & Hassani, A.S. (2013). Assessment of Iran’s international trade potential (A Gravity model analysis). Reef Resources Assessment and Management Technical Paper, 38(5), 398 -409.
Pöyhönen, P. (1963). A tentative model for the volume of trade between countries. Prediction from a Gravity model. Weltwirtschaftliches Archiv, 93-100.
Ravishankar, G., & Stack, M. M. (2014). The Gravity model and trade efficiency: A Stochastic Frontier Analysis of Eastern European countries' potential trade. The World Economy, 37(5), 690-704.
Rizwanulhassan, M. (2015). Economic integration: An analysis of major SAARC countries. South Asian Studies, 30(1), 95.
Salvatore, D. (2012). International economics. Wiley Global Education.
Tinbergen, J. (1962). An analysis of world trade flows in shaping the world economy. Edited by Jan Tinbergen New York NY: Twentieth Century Fund.
Wang, J. (2016). Analysis and comparison of the factors influencing worldwide four kinds of vegetable oil trade: Based on Gravity model.Modern Economy, 7(02), 173.