Matthieu Crozet, Pamina Koenig, Vincent Rebeyrol, 14 January 2009

Institutional failures impede international trade, but they do not impose uniform costs on firms as tariffs do. This column says that institutional insecurity, in addition to lowering the total volume of trade, may discourage the most productive firms from exporting to a country. Improving governance can then produce big gains from trade.


CEPR Policy Research