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Institutions and Export Performance in 26 Transition Economies

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Book cover Entrepreneurship in Transition Economies

Part of the book series: Societies and Political Orders in Transition ((SOCPOT))

Abstract

This chapter examines the influence of institutional conditions—formal and informal—as well as firm age, firm size, and other characteristics on country-level export performance in 26 transition economies. A two-step empirical strategy first identifies clusters of explanatory variables and, second, applies GLS panel estimations to test for the influence of explanatory and control variables on export performance. Results show that quality of formal institutions does not directly influence export performance, but that problematic informal institutions actually improve export performance. This could be because unfavorable home country conditions could motivate firms to seek outside markets. Surprisingly, findings also show average firm size does not explain export performance. Finally, overall younger firm age is found to improve exports but to a threshold, after which export performance suffers as average firm age rises.

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Notes

  1. 1.

    As pointed out by Krasniqi and Desai (2016) and Turkina and Thai (2013), a slightly smaller sample size is appropriate as it allows study of a wider set of conditions. Although this sample is still larger than other comparative empirical studies with smaller samples (e.g., Verheul et al. 2006; Meon and Sekkat 2005), several regressions with more or fewer independent variables were run to check if the sample size could affect the level of significance in the results (Teruel and De Wit 2011). Results were consistent, so this size can be considered acceptable. Also, while this sample is smaller than other export studies (LiPuma et al. 2013), this study uses panel data instead of cross-section data.

  2. 2.

    This study follows the PCA analysis used in Krasniqi and Desai (2016), which is found as follows. The formal factor has four items: tax administration, trade and custom regulations, tax rate, and business licensing/permits; the informal factor has four items: functioning of judiciary and courts, anticompetitive behavior of competitors, policy uncertainty, and corruption; the inputs factor has three items: transportation/telecommunication, electricity, and access to land.

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Author information

Authors and Affiliations

  1. University of Prishtina ‘Hasan Prishtina’, Prishtina, Kosovo

    Besnik A. Krasniqi

  2. Indiana University, School of Public and Environmental Affairs, Bloomington, IN, USA

    Sameeksha Desai

Authors
  1. Besnik A. Krasniqi
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  2. Sameeksha Desai
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Corresponding author

Correspondence to Besnik A. Krasniqi .

Editor information

Editors and Affiliations

  1. Stockholm School of Economics in Riga , Riga, Latvia

    Arnis Sauka

  2. National Research University Higher School of Economics, Moscow, Russia

    Alexander Chepurenko

Appendix: Correlation Matrix of Variables

Appendix: Correlation Matrix of Variables

 

gdpcapl~1

uni

size

sizesq

age

agesq

infrast~e

formal_~t

informa~t

populat~l

logsize~v

GDP per capita (lagged)

1

          

uni

−0.508***

1

         

size

0.0901

−0.00403

1

        

sizesq

0.0752

0.0239

0.963***

1

       

age

0.237*

−0.238*

0.118

0.0653

1

      

agesq

0.252*

−0.238*

0.0924

0.0425

0.990***

1

     

Insputs

0.210

−0.0873

−0.191

−0.0734

−0.406***

−0.365**

1

    

formal_inst

−0.391***

0.208

0.0609

0.0750

−0.251*

−0.286*

0.000000114

1

   

informal_inst

0.0843

−0.309**

0.0876

0.0816

0.367***

0.360**

4.47e-08

−3.5e-08

1

  

population

−0.0642

0.194

0.446***

0.505***

−0.0521

−0.0796

0.0610

0.196

−0.00301

1

 

logsizegov

0.393***

−0.374***

0.376***

0.383***

0.153

0.132

0.0632

0.148

0.258*

0.581**

1

  1. *p < 0.05, **p < 0.01, ***p < 0.001

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Krasniqi, B.A., Desai, S. (2017). Institutions and Export Performance in 26 Transition Economies. In: Sauka, A., Chepurenko, A. (eds) Entrepreneurship in Transition Economies. Societies and Political Orders in Transition. Springer, Cham. https://doi.org/10.1007/978-3-319-57342-7_4

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