Redirecting International Trade: Contracts, Conflicts, and Institutions

Ari Kokko, Bengt Söderlund, Patrik Gustavsson Tingvall

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    The global financial crisis has contributed to the redirection of trade towards new markets outside the OECD area, where both demand patterns and the institutional environment differ from those in the OECD. This study provides an empirical examination of the consequences of this shift, based on Swedish firm-level trade data. Results suggest that weak institutions hamper trade and reduce the length of trade relations, especially for small firms. Trade in industries that are characterized by a high frequency of trade conflicts and where transactions require extensive relationship-specific investments are particularly difficult to redirect towards markets with weak institutions.
    TidsskriftJahrbuecher fuer Nationaloekonomie und Statistik
    Udgave nummer6
    Sider (fra-til)688-721
    StatusUdgivet - 2014