Working Paper: CEPR ID: DP15667
Authors: Javier Barbero Jiménez; Giovanni Madras; Ernesto Rodríguez-Crespo; Andrés Rodríguez-Pose
Abstract: This paper examines – using a novel database of regional trade flows between 267 European regions for 2013 – how government quality affects trade between European Union (EU) regions. The results of a structural gravity cross-sectional analysis of trade show that trade across EU regions is highly influenced by differences in regional government quality. This influence varies by sector of economic activity and by the level of economic development of the region. The results indicate that, if the less developed regions of the EU want to engage in greater interregional trade, improving their institutional quality is a must.
Keywords: trade; quality of government; institutions; regional policy; gravity model of trade; structural estimation
JEL Codes: F15; R10; E02
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Quality of government (H11) | Trade flows (F10) |
| Quality of government (international context) (H11) | Trade flows (F10) |
| Quality of government (intraregional context) (H10) | Trade flows (F10) |
| Quality of government (less developed regions) (H10) | Trade flows (F10) |
| Quality of government (ICT sector) (H11) | Trade flows (F10) |
| Quality of government (financial services sector) (G28) | Trade flows (F10) |
| Quality of government (professional services sector) (H11) | Trade flows (F10) |
| Quality of government (manufacturing sector) (H11) | Trade flows (F10) |
| Quality of government (primary sector) (H11) | Trade flows (F10) |