Helena Engemann, Yaghoob Jafari, Thomas Heckelei
Published inJournal of Agricultural Economics
Recent trade disruptions and their consequences on sup-ply chains show the importance of stable trade relations for exporters’ economic planning and importers’ supply security. Both instability in trading partners’ economic and institutional environment and differences between them are likely to exacerbate these disruptions. We inves-tigate the role of exporters’ institutional quality (IQ) and its similarity with importers’ IQ in the stability of trade links. We focus on the trade links of agri-food products exported from sub-Saharan African (SSA) countries to the European Union (EU-28) and consider three di-mensions of IQ: ‘government selection, monitoring, and replacement’; ‘efficiency of policy formulation and imple-mentation’; and ‘respect of citizens and state for institu-tions’. Using a discrete-time duration model, we show that the duration of SSA exports to the EU-28 increases with higher exporters’ IQ and similarity of trading partners’ IQ. The strongest impact of exporters’ IQ is associated with ‘government selection, monitoring, and replacement’. In terms of the similarity of trading partners, ‘respect of citi-zens and state for institutions’ has the largest impact on trade durations. Our findings suggest that the improve-ment of countries’ IQ may boost the stability of trade rela-tionships. Moreover, the similarity of IQs between trading partners supports the stability of trade links and should be carefully considered when establishing new trade relations.