Theoretical and Empirical Analysis of the Impact of the Rule of Law and the Contracts Enforcement on the Creation of export Advantage

Document Type : Scientific research

Authors

• , Hedayat Hatami
• , kaveh Derakhshani Darabi
• , Dariush Hasanvand

https://doi.org/10.22067/lowecon.2022.41775

Abstract

New international trade theories emphasize on the importance of institutional quality in creating export advantages. According to these theories, the rule of law and the contract enforcement reduce transaction and production costs and thus affects the creation of competitive advantage. Therefore, the main purpose of this study is to theoretically and empirically examine the impact of institutional quality in the framework of the rule of law and the contracts enforcement on creating the competitive advantage in the export of petrochemical industries.
For this purpose, first, with reviewing the literature, the subject of the impact of the rule of law and the contracts enforcement on the creation of advantage has been theoretically modeled. then, it is tested with data from eight selected OPEC countries during 1997-2017 and the coefficients has estimated using Generalized Method of Moments.
The results confirm the research hypothesis that the rule of law has a positive and significant effect on the creation of export advantage. The results also show that the trade openness and human capital have a positive significant relationship with the creation of competitive advantage.
 
 
 
 

Keywords

• Competitive Advantage
• Institutional Quality
• Rule of Law

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