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Corruption and international trade: a comprehensive analysis with gravity

Author

Listed:
  • Salvador Gil-Pareja
  • Rafael Llorca-Vivero
  • José Antonio Martínez-Serrano

Abstract

Purpose - The purpose of this paper is to analyze the impact of corruption on trade. Design/methodology/approach - The authors estimate gravity equations with the last econometric advances on a wide sample of countries and years using three different measures of corruption. Two of them belong to the so-called perception-based indexes and the third is derived from a structural model that takes into account the causes and indicators of corruption across countries. Findings - A negative effect of corruption on trade appears with perceptions, but it is not widespread. However, the authors find sensible evidence of the “grease the wheels” view with the structural index if low and middle income countries are implicated. Additionally, when using this measure, differences in corruption levels negatively impact trade. Both results are in line with expectations. Originality/value - Moreover, membership in regional trade agreements does not seem to significantly alter these results.

Suggested Citation

  • Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2019. "Corruption and international trade: a comprehensive analysis with gravity," Applied Economic Analysis, Emerald Group Publishing Limited, vol. 27(79), pages 3-20, August.
  • Handle: RePEc:eme:aeapps:aea-06-2019-0003
    DOI: 10.1108/AEA-06-2019-0003
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    Citations

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    Cited by:

    1. Peiró-Palomino, Jesús & Rodríguez-Crespo, Ernesto & Suárez-Varela, Marta, 2022. "Do countries with higher institutional quality transition to cleaner trade?," Ecological Economics, Elsevier, vol. 201(C).
    2. Aboushady, Nora & Zaki, Chahir, 2023. "Are global value chains for sale? On business-state relations in the MENA region," IDOS Discussion Papers 17/2023, German Institute of Development and Sustainability (IDOS).
    3. Esteve-Pérez Silviano & Gil-Pareja Salvador & Paniagua Jordi & Llorca-Vivero Rafael, 2021. "Corruption and International Trade: A Re-assessment with Intra-National Flows," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 15(1), pages 187-198, January.
    4. Suisui Chen & Xintian Liu & Shuhong Wang & Peng Wang, 2023. "Regional Corruption, Foreign Trade, and Environmental Pollution," Sustainability, MDPI, vol. 15(1), pages 1-17, January.

    More about this item

    Keywords

    International trade; Corruption; Gravity equation; Income level; Regional trade agreements; F14; F15;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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