Institutions Trade & Economic Development
Since 1950 the global Gini coefficient for between-country income inequality has stood at about 55, reflecting a twenty five-fold difference in wealth between the richest and poorest countries. A well-known stylized fact underpinning this feature of the world economy is that the real investment rate of wealthy countries such as Norway and the United States […]
If economic development is essentially about an economy’s transition from agricultural to industrial production, then the attainment of a comparative advantage in industrial products is widely regarded to be the hallmark of successful development. Against this backdrop, governments aiming to promote development often seek to do so partly through the promotion of industrial exports. In […]
The distributional implications of trade liberalization have long been of central interest to economists. That may be why the Stolper-Samuelson Theorem is probably trade theory’s best known result. For those new to trade it demonstrates that, as a result of an increase in the relative price of a good, factors used intensively in its production […]
The main focus of the recent literature on the economics of institutions has been on the role of institutions that define and enforce contracts and property rights in enhancing economic performance. A key finding of this literature is that countries with better rule of law and more private property rights protection have on average grown […]
Most of the public debate concerning the liberalization of international trade revolves around the effect of trade on the levels of employment. Proponents of trade liberalization argue that higher demand for domestic products from abroad would increase employment. Opponents worry that competition with imported products, in driving domestic producers out of business, would lead to […]
According to Douglas North’s ‘Institutions Hypothesis’, powerful groups within a society will manipulate their nation’s economic institutions in their own interests if they are not bound by appropriate constraints, with potentially deleterious effects on economic development. The main focus is on institutions that specify and enforce contracts and property rights to reduce transactions costs. Existing […]
The Trade Related Aspects of Intellectual Property (TRIPS) agreement is an undertaking by members of the World Trade Organisation (WTO) to respect each others’ property rights. At its inception, its main purpose was to protect the intellectual property rights (IPRs) of Northern firms, who have historically tended to be the main innovators, in Southern markets […]
Markets rest on institutions that ensure individuals can commit to keep their contractual obligations. The literature has focused both on formal contract-enforcing institutions, where contracts can be enforced by a third party such as a court of law, and informal institutions where the parties enforce an informal contract themselves. Self-enforcing agreements are particularly important in […]
According to “An Economic Theory of the GATT” by Bagwell and Staiger (1999), the main purpose of a trade agreement is to escape from a terms-of-trade driven prisoner’s dilemma. This is where all countries have a collective incentive to liberalise trade but an individual incentive to adopt protectionist measures such as tariffs. Recent econometric evidence […]
The Trade Related Aspects of Intellectual Property (TRIPS) agreement is an undertaking by members of the World Trade Organisation (WTO) to respect each others’ property rights. At its inception, its main purpose was to protect the intellectual property rights (IPRs) of Northern firms, who have historically tended to be the main innovators, in Southern markets […]