Expanding Export Variety: The Role of Institutional Reforms in Developing Countries

Liugang Sheng and Dennis Yang

No 7611, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents theory and evidence showing that institutional reforms in developing countries can effectively expand their product varieties in export. Our model demonstrates that relaxing foreign ownership controls and improving contract enforcement can induce multinational companies to produce new products in host developing countries, and that a combination of the two reforms has an amplifying effect on the introduction of product varieties. Consistent with these theoretical predictions, we find empirically that ownership liberalization and judicial quality played an important role in raising the extensive margin of processing exports in China for the period of 1997-2007.

Keywords: export variety; ownership structure; contract environment; processing trade; policy reform; China (search for similar items in EconPapers)
JEL-codes: D23 F14 L22 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2013-09
New Economics Papers: this item is included in nep-cwa, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Expanding export variety: The role of institutional reforms in developing countries (2016)
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