Trade Policy Barriers versus Institutional Trade Barriers: an Application Using “good Old” Ols

Trade policy barriers are only one element of the overall trade costs. Due to the decrease in the influence of tariff barriers on trade, institutional barriers may be increasing in relative importance. In this line, this paper compares and quantifies the impact that a number of institutional and policy trade barriers have on bilateral trade flows. Results indicate that institutional trade barriers have a greater impact on trade flows than tariff barriers. According to these findings, trade policy negotiation efforts should focus on facilitating trade processes and should be at the forefront of multilateral negotiations.