International Conference on Applied Economics (ICOAE) 2014

This study aimed to investigate the effect of institutional differences between countries on trade flows of agricultural products. The analysis was carried out by estimating the gravity model as proposed by Anderson and van Wincoop (2003) and Anderson and van Wincoop (2004). The sample covered a total of 59 countries for the period from 2005 to 2010. The results showed that the institutional differences between countries have a significant and negative effect on agricultural trade. Furthermore, the greater is the difference in the quality of institutions between countries, the higher its restrictive effect on trade.