Institutional quality and bilateral trade

Abstract

This study examined the impact of institutional quality on bilateral trade between Myanmar and the selected trading partners between 2000 and 2020. The random effects model was used to conduct regression analysis and the required secondary data was collected from the World Development Indicators and World Governance Indicators. Bilateral trade was considered as the dependent variables and GDP per capita, distance, sanction, and governance indicators such as government effectiveness, rule of law, control of corruption, political stability, regulatory quality and voice and accountability were included as independent variables. The regression results showed that the institutional quality has statistically significant positive effects on bilateral trade between 2000 and 2020. However, the results revealed that the institutional quality of Myanmar during the military rule (2000-2010) has statistically significant negative effects on bilateral trade. The findings suggest that the government should make great effort to maintain the political stability within the country as a priority by learning the lesson from the past and to strengthen the institutional framework onwards.