Institutions, infrastructure, and globalization — and how each moves bilateral aggregate exports between 36 OECD economies over the 1995–2018 panel. A traditional gravity equation extended with state fragility, an innovation index, and economic + political globalization indices.
The paper tests seven hypotheses against the OECD panel — three on standard trade-policy variables (EU, RTAs, common currency), four extending the gravity model into institutional quality, infrastructure, globalization, and tariff barriers.
Estimated with fixed-effects OLS over 1995–2018, with all specifications passing the RESET test for misspecification. The results split cleanly into three buckets — robust positives, expected negatives, and the perplexing.
Both globalization indices contribute substantially and consistently to bilateral exports across the full and recent (2011–2018) periods. The paper's headline contribution.
An exporter's innovation capacity has a significant, positive impact on bilateral aggregate exports.
Among infrastructure indicators, road quality stands out with a substantial positive effect on the dependent variable.
Both reporter and partner being EU or RTA members raises bilateral exports; common currency raises them further still.
Higher state fragility on the exporter side meaningfully depresses bilateral exports — consistent with the institutions-as-trade-cost view.
Both come in negative — the most perplexing results. Possible explanation: stable, open exporters service larger domestic markets and source more inputs locally, dampening measured export volume.
Most gravity-model papers stop at GDP, distance, RTAs, and currency. This thesis extends the equation with three under-tested exporter-side variables and re-runs everything on a shorter, more recent sub-period.
All 78 pages — abstract, literature review, methodology, results tables, robustness checks, appendices and references. Use the toolbar inside the viewer to navigate, search, or zoom.