Dang, D Anh (2010): Trade Liberalization and Institutional Quality: Evidence from Vietnam.
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Recent cross-country research shows that there is a causal relationship between trade liberalization and quality of institutions. The literature on cross-country studies has been criticized because differences in legal systems and other institutions across countries are difficult to control for. An in-depth case study of a particular country’s experience can provide a useful complement to cross-country regressions. Using the unique dataset from provincial competitiveness survey and a natural experiment from joining the World Trade Organization, I find that variations in economic institutions across provinces in Vietnam can be explained by trade liberalization. To overcome endogeneity problems, I use minimum distance from each province to main economic centres as an instrument for trade liberalization. The instrumental variable approach shows that the direction of influence is from greater openness to better institutions. The results hold after controlling for various additional covariates. It is also robust to various alternative measures of institutions. I also find that trade liberalisation has greater short term impacts on institutional quality in the Northern provinces.
|Item Type:||MPRA Paper|
|Original Title:||Trade Liberalization and Institutional Quality: Evidence from Vietnam|
|English Title:||Trade Liberalization and Institutional Quality: Evidence from Vietnam|
|Keywords:||Trade liberalization, institutions, Vietnam|
|Subjects:||O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth
F - International Economics > F1 - Trade
|Depositing User:||Anh D Dang|
|Date Deposited:||03. Nov 2010 09:08|
|Last Modified:||12. Feb 2013 11:30|
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