The Effect of Institutional Factors on Non-Oil Export in D8 Countries

New theories of international trade considered exports as a function of exchange rates, inflation and non-price variables such as R&D expenditures, human capital and institutional variables. Recently, the improvement of relations among people and the reduction of the probability of conflict in people's relationships are considered in the framework of Institutionalization. Institutions through the creation of a stable relations lead to reduce uncertainty in markets, decrease transaction costs and business transactions, increase competition in the market and finally increase exports. The present study is focused the evaluation of the effect of institutional factors on non-exports member countries of D8 using panel data approach. The data cover the period 1995-2007. The results of this paper show that D8 countries like other countries are entitled the endogenous mechanisms of exports including the accumulation of human capital and research and development expenditures. Institutional factors such as the observance of patent, doing business, legal origin and quality of education increase the effects of non- price factors such as domestic and foreign R&D and human capital on non-oil exports of D8 countries. Moreover, the empirical estimation results confirm that the World GDP has a positive and statistically significant effect while inflation rate has a negative and statistically significant on non-oil exports of the countries. However, the results show that real effective exchange rate is insignificant.