Trade Governance and Intra-Commonwealth Trade

Abstract

This paper focuses on twenty-first century trade governance patterns within Commonwealth countries. The specific research questions it explores are: first, what is the distinction between the ‘trade governance’ and ‘good governance’ agendas? Second, what indicators exist for measuring trade governance and how its use can foster trade gains for the Commonwealth countries? Third, what policies can promote trade governance and enhance the Commonwealth Advantage – that is, higher intra-Commonwealth trade and investment and lower trade costs. Using an augmented gravity model, we examine the relationship between Commonwealth countries’ exports and trade governance, foreign direct investment, intellectual property rights, trade facilitation and contract enforcement. Results show a complementary relationship between exports and governance indicators. We find a positive correlation between Commonwealth countries’ exports and foreign direct investment flows, intellectual property rights and trade facilitation variables, while efficient contract enforcement is important for intra-Commonwealth trade.