What is Political Instability

In the literature on exports, the question of why some firms decide to export and why others decide to focus on the domestic market has only received fragmented and different answers. The only overemphasized factor, productivity, seems to be a dead end when empirical evidence is given for high productivity firms which decide to remain in the domestic market. This is mainly due to the ignorance of the role of the firm in international trade by the majority of the literature. In this empirical research, the aim of the author is to test the impact of legal, institutional, and financial conditions on the firm decision to export based on the Enterprise Survey by the World Bank for the Turkish Cypriot people, which remained out of the international community for 57 years, where Turkey emerged as its access point to international markets. Hence, the study contributes to the existing literature on export development by highlighting the obstacles in front of the export decisions of firms and addressing a hitherto not addressed case in international economics.