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Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade

Open access
Nunn, N.·2007·The Quarterly Journal of Economics

Abstract

Is a country's ability to enforce contracts an important determinant of comparative advantage? To answer this question, I construct a variable that measures, for each good, the proportion of its intermediate inputs that require relationship-specific investments. Combining this measure with data on trade flows and judicial quality, I find that countries with good contract enforcement specialize in the production of goods for which relationship-specific investments are most important. According to my estimates contract enforcement explains more of the pattern of trade than physical capital and skilled labor combined.

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Metadata

Authors
Nunn, N.
Venue
The Quarterly Journal of Economics
Published
2007-05-01
Volume
122
Issue
2
Pages
569-600
ISSN
  • 0033-5533 (ISSN-L)
  • 1531-4650
OpenAlex
W1528104378
Cited by
1,694
References
3
FWCI
101.28
Type
journal article
Language
en
Open access
bronze

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Nunn, N. (2007). Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade. The Quarterly Journal of Economics. https://doi.org/10.1162/qjec.122.2.569

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