WTO Working Papers

WTO working papers usually represent research in progress. Such research may be conducted in the preparation of WTO Secretariat reports, studies or other material for WTO members. The papers are circulated for comment because the WTO considers critical review of professional research to be extremely important.


Distance, Formal and Informal Institutions in International Trade

This paper brings together three strands of literature on the determinants of international trade – distance, formal, and informal institutions – to explain differences in export performance across countries. Using an augmented gravity model, we find that the importance of formal institutions (rule of law) for bilateral trade increases with distance.


Keywords: Migrant networks, International trade, Rule of law, Distance
JEL: F22: International Economics / International Factor Movements and International Business / International Migration; O43: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Institutions and Growth; F14: International Economics / Trade / Empirical Studies of Trade; D23: Microeconomics / Production and Organizations / Organizational Behavior; Transaction Costs; Property Rights; L14: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Transactional Relationships; Contracts and Reputation; Networks
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