Institutions and International Trade: A Reconsideration of Comparative Advantage

24 Pages Posted: 8 May 2006

See all articles by Marianna Belloc

Marianna Belloc

Sapienza University of Rome - Department of Economics

Abstract

Persistent inconsistency between predictions of standard theoretical models and empirical evidence of international trade dynamics suggests that the traditional understanding of the determinants of actual international trade patterns is incomplete. What is missing? A recent literature suggests paying more attention to the role of the domestic institutional environment. The level and nature of development of the relevant institutions may be shown to affect competitiveness, by altering both production and transaction costs. In the extreme case, alternative institutional architectures that emerge in different countries may be interpreted as the cause of relative advantage/disadvantage even if technological levels, factor endowments and tastes are identical everywhere. Although in standard international trade models institutions remain implicit, it is hard to explain trade patterns and international competitiveness without taking institutions explicitly into consideration. By reviewing and reorganizing the most interesting contributions on this issue, this survey discusses how institutional diversity affects comparative advantage and international trade dynamics.

Suggested Citation

Belloc, Marianna, Institutions and International Trade: A Reconsideration of Comparative Advantage. Journal of Economic Surveys, Vol. 20, No. 1, pp. 3-26, February 2006, Available at SSRN: https://ssrn.com/abstract=886613 or http://dx.doi.org/10.1111/j.0950-0804.2006.00274.x

Marianna Belloc (Contact Author)

Sapienza University of Rome - Department of Economics ( email )

Via del Castro Laurenziano 9
Rome, 00161
Italy

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
19
Abstract Views
804
PlumX Metrics