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Quality of government and regional trade: evidence from European Union regions

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  • Barbero, Javier
  • Mandras, Giovanni
  • Rodríguez-Crespo, Ernesto
  • Rodríguez-Pose, Andrés

Abstract

Using a novel database of regional trade flows between 267 European regions for 2013, this paper examines how government quality affects trade between European Union (EU) regions. The results of a structural gravity cross-sectional analysis of trade show that trade across EU regions is highly influenced by differences in regional government quality. This influence varies by both sector of economic activity and the level of economic development of the region. The results indicate that if the less developed regions of the EU want to engage in greater interregional trade, improving their institutional quality is a must.

Suggested Citation

  • Barbero, Javier & Mandras, Giovanni & Rodríguez-Crespo, Ernesto & Rodríguez-Pose, Andrés, 2021. "Quality of government and regional trade: evidence from European Union regions," LSE Research Online Documents on Economics 108211, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:108211
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    4. Eduardo Hernandez-Rodriguez & Ron Boschma & Andrea Morrison & Xianjia Ye, 2024. "Functional upgrading and downgrading in global value chains: The role of complementary interregional value chain linkages in EU regions," Papers in Evolutionary Economic Geography (PEEG) 2432, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2024.
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    More about this item

    Keywords

    quality of government; institutions; regional policy; gravity model of trade; structural estimation;
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    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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