ERF 27th Annual Conference
On the Political Economy of Trade Agreements: A De Jure and De Facto Analysis of Institutions
No.
ERF27_2
Publisher
ERF
Date
May, 2021
Topic
F1. Trade
This paper examines the effect of the quality of institutions on the membership in trade agreements from a de jure and a de facto perspectives, with a special focus on the Middle East North Africa countries. First, for the de jure effect, we analyze how the quality of institutions affect the likelihood of joining a trade agreement. Moreover, at the de facto level, this paper examines how the difference in quality of institutions and enforceability degree affects the volume of trade among trade partners. Our main findings show the larger the difference in the quality of political institutions, the less likely the country signs a deeper trade agreement (compared to more shallow ones). Moreover, the more the agreement is enforced, the greater the positive effect on trade flows. This result holds for the enforcement of the aspects related to the World Trade Organization provisions and those not related to it. Yet, the larger the institutional difference, the lower the negative effect on trade flows. It is worthy to note also that our results hold even when we control for the selection bias related to joining a trade agreement.
Authors
Asmaa Ezzat
Assistant Professor (Lecturer) at the Economics Department...
Research Fellows
Chahir Zaki
Chaired Professor of Economics, University of Orléans