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Why Trading with Dictators May Nevertheless Help the People: On the Interplay between Trade, Political Regimes and Economic Institutions

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Author

  • Usman Khalid

Summary, in English

Recent empirical studies confirm a positive relationship between trade liberalization or trade openness and the quality of domestic economic institutions. An isolated analysis of trade openness per se, however, may grossly simplify the mechanisms at work, as the linkage between open trade and quality of economic institutions is likely to vary for different political regimes. This study examines the causal relationship between trade openness and quality of economic institutions under different political institutions. We find that in the presence of extractive political institutions, the effect of trade openness on economic institutions is reduced significantly.

Publishing year

2015

Language

English

Publication/Series

Working Paper / Department of Economics, School of Economics and Management, Lund University

Issue

15

Document type

Working paper

Publisher

Department of Economics, Lund University

Topic

  • Economics

Keywords

  • trade openness
  • political institutions
  • economic institutions
  • institutional change

Status

Published