The Impact of Political Institutional Reform on Trade Flows－An Evidence from Emerging Markets in East Asia

• Main Authors: Hsin-Yun Huang, 黃馨筠
• Other Authors: 邱明斌
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/p745tm

碩士 === 國立中興大學 === 國家政策與公共事務研究所 === 97 === Most researchers have widely accepted that international trade enhances national economic growth and the world output. Rising international trade flows are a primary component of globalization. However, the economic activities are embedded in other aspects of society; particularly when the enhancement of international trade flows heavily is dependent upon the coordination of social systems of each country. Therefore, it becomes essential to improve the quality of institutions in order to create a favorable social environment for promoting international trade. The economic development of East Asian emerging markets has long-run relied on their international trade. Politically, however, these countries frequently face crises caused by government turnovers as well as unstable domestic institutions which are unfavorable to promoting international trade. As such, the primary purpose of this study is to empirically examine the impact of institutional reforms on international trade flows. We apply Gravity Model to study the impact of four types of institutional reforms- democratic political system, government stability, legal, and administrative reforms-on trade flows for the sample of eight East Asian emerging countries during 1980-2005. We also complement the empirical results with case studies such as Indonesia, South Korea, and Thailand. Empirical results indicate that government stability, legal, and administrative reforms are more significant in promoting international trade flows than reforms on democratic political reforms. We also find the institutional reforms may have the short-term costs indicated by the decreased trade flows during the period that reforms are implemented. Permanent institutional reforms are, however, found to be important in determining international trade in the long run.