IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v41y2018i8p1918-1940.html
   My bibliography  Save this article

Bilateral trust and trade: Evidence from China

Author

Listed:
  • Weibo Xing
  • Li‐An Zhou

Abstract

By changing transaction costs, trust can be a determinant of interregional economic exchange. Based on data sets of bilateral trust and trade at provincial level in China, this study investigates the trust–trade relationship empirically. As a channel of affecting bilateral trade, bilateral trust is incorporated into gravity models. By controlling for institutional quality, labour migration and other economic indicators, the baseline results show that the bilateral trust is positively correlated with the bilateral trade significantly. The sensitivity tests using an alternative estimation of interprovincial trade in China also confirm this positive trust–trade relationship. In addition, we use an instrumental‐variable estimation to control for the endogeneity of bilateral trust, and find that the trust–trade relationship is robust. This relationship seems to reveal that improving bilateral trust can be a new channel of boosting bilateral trade.

Suggested Citation

  • Weibo Xing & Li‐An Zhou, 2018. "Bilateral trust and trade: Evidence from China," The World Economy, Wiley Blackwell, vol. 41(8), pages 1918-1940, August.
    • Handle: RePEc:bla:worlde:v:41:y:2018:i:8:p:1918-1940
    DOI: 10.1111/twec.12583
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/twec.12583
    Download Restriction: no
    File URL: https://libkey.io/10.1111/twec.12583?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wu, Xiaokang & Yu, Jinping, 2023. "Does dialect difference impede patent transaction? Evidence from China's inter-city patent license data," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    2. Yi Chen & Ziying Fan & Xiaomin Gu & Li-An Zhou, 2020. "Arrival of Young Talent: The Send-Down Movement and Rural Education in China," American Economic Review, American Economic Association, vol. 110(11), pages 3393-3430, November.
    3. Gorgens, Tue & Meng, Xin & Zhao, Guochang, 2024. "Impact of Temporary Migration on Long-Run Economic Development: The Legacy of the Sent-down Youth Program," IZA Discussion Papers 16951, Institute of Labor Economics (IZA).
    4. Gideon Onyewuchi Ndubuisi, 2020. "Contractual frictions and the patterns of trade: The role of generalized trust," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(7), pages 775-796, October.
    5. José De Sousa & Amélie Guillin & Julie Lochard & Arthur Silve, 2020. "Trust and Specialization: Evidence from U.S. States," Cahiers de recherche 2010, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    6. Limin Du & Zhenhao Lai & Jinchuan Shi & Zheng Wang, 2024. "Comrades from the town: How did a factory‐commune pairing policy during the Send‐Down Movement propel rural industrialization in China?," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(1), pages 25-47, January.
    7. Wu, Xiaokang & Yang, Jijun, 2023. "High-speed railway and patent trade in China," Economic Modelling, Elsevier, vol. 123(C).
    8. Doanh Khanh Nguyen & Van Ngoc Thi Pham & Heo, Yoon, 2019. "Impact of institutional and cultural distance on ASEAN's trade efficiency," Economics Discussion Papers 2019-57, Kiel Institute for the World Economy (IfW Kiel).
    9. Ndubuisi, Gideon & Konte, Maty, 2019. "Credit constraints and trade performance: Does trust-based social capital matter?," MERIT Working Papers 2019-046, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:41:y:2018:i:8:p:1918-1940. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.