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Trade liberalization and institutional reforms

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  • Angela Cheptea

    (Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique)

Abstract

The accession of Central and Eastern European (CEE) countries to the European Union (EU) is expected to lead to the new member countries becoming more like the older members, including in terms of trade. In this paper, we focus on two factors promoting CEE–EU trade integration: trade liberalization and institutional reforms. Measures of trade liberalization undertaken by both parties during the 1990s were very substantial, but did not always produce the expected upsurge of regional trade flows. Much less progress has been made in improving the functioning of CEE institutions (e.g., progress in the privatization process or in reducing corruption). Countries where most important changes at the institutional level occurred were also those that most increased their trade with the EU. Comparing the impact of these two factors, we find that improving institutions in CEE countries can generate as much trade as the removal of all tariff and non-tariff barriers. The paper also addresses the issue of the presence of reversed causality between trade and institutions, and the pro-trade effect of institutional similarity.

Suggested Citation

  • Angela Cheptea, 2007. "Trade liberalization and institutional reforms," Post-Print hal-02360551, HAL.
    • Handle: RePEc:hal:journl:hal-02360551
    DOI: 10.1111/j.1468-0351.2007.00286.x
    Note: View the original document on HAL open archive server: https://hal.science/hal-02360551v1
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    References listed on IDEAS

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    Cited by:

    1. Fuchs, Michaela & Wohlrabe, Klaus, 2008. "Institutions, trade, and integration: what can be expected within the enlarged EU?," Dresden Discussion Paper Series in Economics 16/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    2. Stephan Huber, 2018. "Trade Patterns and Endogenous Institutions: Global Evidence," Contributions to Economics, in: Product Characteristics in International Economics, chapter 0, pages 91-120, Springer.
    3. Tingting Zhang & Ju Yang, 2023. "Factors influencing the global agricultural trade: A network analysis," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(9), pages 343-357.
    4. Hochman, Gal & Tabakis, Chrysostomos & Zilberman, David, 2013. "The impact of international trade on institutions and infrastructure," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 126-140.

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