Institutional quality, infrastructure and economic growth: Evidence from RCEP countries

Abstract

Large-scale regional trade agreements have led to a gradual increase in the ease of trade development among countries. The role of geographical distance and other location factors on trade development among countries has gradually diminished, while the institutional conditions of different countries have gradually increased their role on trade development among countries. Given the development process of the RCEP agreement, this study uses panel data from 2011-2021 and explores the mechanism of the institutional quality of RCEP countries affecting China’s import and export trade with them based on a gravity model. In addition, this study explores the level of infrastructure in mediating the effect of the process. It is found that the institutional quality of RCEP countries has a substantial impact on China’s import and export transactions with them. In addition, infrastructure plays a fully mediating effect in the process. Therefore, bilateral trade can be promoted by upgrading the institutional environment, infrastructure development and optimising the business environment.