Institutions, Infrastructure, and Trade

SummaryWe work with a panel of bilateral trade, exploring the influence of infrastructure and institutional quality on patterns of trade with a Poisson estimator, extended with the Baier and Berstrand method for multilateral resistance and accounting for firm heterogeneity and selection. Trade depends on institutional quality and exporter and importer access to well developed transport and communications infrastructure. While we emphasize exports of developing countries, low institutional and infrastructure quality in the South also limits market access for exports from the North. The pattern of results implies that policy emphasis on developing country market access while not providing enough support for trade facilitation, may be misplaced.