Trade, Inequality, and the Political Economy of Institutions Andrei A. Levchenko

ISBN: 9786613825551

Published: February 1st 2006

ebook

54 pages


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Trade, Inequality, and the Political Economy of Institutions  by  Andrei A. Levchenko

Trade, Inequality, and the Political Economy of Institutions by Andrei A. Levchenko
February 1st 2006 | ebook | PDF, EPUB, FB2, DjVu, AUDIO, mp3, RTF | 54 pages | ISBN: 9786613825551 | 4.25 Mb

We analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, and property rights. In our model, firms differ in their preferences for institutional quality, which isMoreWe analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, and property rights. In our model, firms differ in their preferences for institutional quality, which is determined endogenously in a political economy framework.

We show that trade opening can worsen institutions when it increases the political power of a small elite of large exporters who prefer to maintain bad institutions. The detrimental effect of trade on institutions is most likely to occur when a small country captures a sufficiently large share of world exports in sectors characterized by economic profits.



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