Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade
Reads0
Chats0
TLDR
This paper found that countries with better contract enforcement specialize in industries that rely heavily on relationship-specific investments, and this is true even after controlling for traditional determinants of comparative advantage such as endowments of capital and skilled labor.Abstract:
When relationship-specific investments are necessary for production, under-investment occurs if contracts cannot be enforced. The efficiency loss from under-investment will differ across industries depending on the importance of relationship-specific investments in the production process. As a consequence, a country’s contracting environment may be an important determinant of comparative advantage. To test for this, I construct measures of the efficiency of contract enforcement across countries and the importance of relationship-specific investments across industries. I find that countries with better contract enforcement specialize in industries that rely heavily on relationshipspecific investments. This is true even after controlling for traditional determinants of comparative advantage such as endowments of capital and skilled labor.read more
Figures
Citations
More filters
Journal ArticleDOI
Trade Imbalances, Export Structure and Wage Inequality
Rosario Crinò,Paolo Epifani +1 more
TL;DR: In this paper, the authors show that, in a Heckscher-Ohlin model with a continuum of goods, a Southern (Northern) trade surplus leads to an increase in the average skill intensity of exports, in the relative demand for skills and in the skill premium in both countries.
Report SeriesDOI
What Explains the Volume and Composition of Trade
TL;DR: In this article, the authors quantified the importance of different determinants of trade at the industry level using a sample of 54 OECD and non-OECD economies and analyzed the effect of tariffs on the volume and composition of trade.
Posted Content
Bank Distress and Manufacturing: Evidence from the Great Depression
James Lee,Filippo Mezzanotti +1 more
TL;DR: The authors examined the influence of the financial sector on the real economy and found that industries with high levels of pre-Depression external finance dependence declined in employment, output, and establishment growth.
Journal ArticleDOI
Corruption perception and bilateral trade flows: Evidence from developed and developing countries
TL;DR: In this paper, the authors examined the impact of corruption on bilateral trade flows in developed and developing countries by using an extension of the gravity panel model and found that low domestic corruption level in the reporting countries will positively affect import activities and that fact becomes more apparent for developing countries.
Journal ArticleDOI
Which legal procedure affects business investment most, and which companies are most sensitive? Evidence from microdata.
TL;DR: The approach is novel, because it shows that the impact is greater in large companies than small ones, that it occurs more strongly in industrial companies, and that the civil (private) jurisdiction is the crucial factor in achieving efficiency improvements.
References
More filters
Journal ArticleDOI
The central role of the propensity score in observational studies for causal effects
TL;DR: The authors discusses the central role of propensity scores and balancing scores in the analysis of observational studies and shows that adjustment for the scalar propensity score is sufficient to remove bias due to all observed covariates.
Journal ArticleDOI
The Economic Institutions of Capitalism
TL;DR: The Economic Institutions of Capitalism as mentioned in this paper is a seminal work in the field of economic institutions of capitalism. Journal of Economic Issues: Vol. 21, No. 1, pp. 528-530.
Journal ArticleDOI
Law and Finance
TL;DR: In this article, the authors examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common-law countries generally have the strongest, and French civil law countries the weakest, legal protections of investors, with German- and Scandinavian-civil law countries located in the middle.
Journal ArticleDOI
Markets and Hierarchies: Analysis and Antitrust Implications.
Journal ArticleDOI
Legal Determinants of External Finance
TL;DR: The authors showed that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets than those with stronger investor protections.