Domestic Formal and Informal Institutions: Their Substitutability and Comparative Advantage

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https://link.springer.com/article/10.1007/s10290-022-00483-0

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https://doi.org/10.1007/s10290-022-00483-0
 http://hdl.handle.net/11603/26303

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UMBC Economics Department
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https://orcid.org/0000-0002-8639-8819

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2022-09-26

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journal articles
postprints
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Citation of Original Publication

Park, S.M. Domestic formal and informal institutions: their substitutability and comparative advantage. Rev World Econ (2022). https://doi.org/10.1007/s10290-022-00483-0

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This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://doi.org/10.1007/s10290-022-00483-0
Access to this item will begin on 08-11-2023

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Abstract

This paper empirically examines how country-specific formal and informal institutions affect export patterns. The index for formal institutional quality evaluates electoral rules, judicial independence, and other constraints on executives. The index for informal institutional quality comprises degrees of trust, control, and obedience. Using the revealed comparative advantage index, I find that countries with high-quality formal and informal institutions tend to have institutional comparative advantage. Results also suggest that formal and informal institutions substitute for one another in generating institutional quality. I find robust results even when controlling for an important potential source of reverse causality