Discussion Papers

No.879 Exporting and Institutions: Firm-Level Evidence from Malaysian Manufacturing

by Cassey LEE

February 2023


Institutions are regarded as critical determinants of economic growth. Recent theories have posited a positive relationship between trade and institution quality. Most empirical work on trade and institutions has mostly relied on cross-country panel data. Using firm-level data from Malaysian manufacturing, this study aims to empirically examine this relationship. The results on the relationship between exporting and institutions indicate that perceptions of court fairness are negatively related to exporting. Furthermore, the result for trade-related institutions is not statistically significant. A key limitation of microdata studies is the lack of responses to survey questions pertaining to corruption. Additionally, more effort is required to develop better proxies for measuring the quality of institutions at the micro-level.

Keywords: Trade, Institutions, Malaysia

JEL classification: F15, F53

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