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Trade protection and bureaucratic corruption: an empirical investigation

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  • Pushan Dutt

Abstract

We examine whether protectionist trade policies lead to increased bureaucratic corruption. Using multiple measures of corruption and trade policies, we find strong evidence that corruption is significantly higher in countries with protectionist trade policies. These results are robust to endogeneity concerns. Next, a panel‐data‐based GMM methodology is used to estimate a dynamic model of corruption. This estimator controls for country‐specific effects, potential endogeneity of trade policy, and existence of measurement errors afflicting the corruption data. The paper strengthens the case for trade liberalization and argues that trade reforms may lead to improvements in governance. On examine la question à savoir si les politiques commerciales protectionnistes tendent à faire croître la corruption bureaucratique. A l'aide de multiples mesures de la corruption et des politiques commerciales, on montre qu'il existe un fort support pour la proposition que la corruption est plus forte, et de manière significative, dans les pays qui ont des politiques protectionnistes. Ces résultats ne sont pas attaquables pour des raisons d'endogénéité. On utilise ensuite des données de panel et la méthode généralisée des moments pour calibrer un modèle dynamique de corruption. Cette méthode d'estimation normalise pour tenir compte des effets spécifiques de pays, de l'endogénéïté potentielle de la politique commerciale, et de l'existence d'erreurs de mesure dans les données sur la corruption. Le mémoire renforce l'argumentation en faveur de la libéralisation des échanges, et montre que ces réformes peuvent entraîner des améliorations de la gouvernance.

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  • Pushan Dutt, 2009. "Trade protection and bureaucratic corruption: an empirical investigation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(1), pages 155-183, February.
  • Handle: RePEc:wly:canjec:v:42:y:2009:i:1:p:155-183
    DOI: 10.1111/j.1540-5982.2008.01503.x
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    2. Elbahnasawy, Nasr G., 2014. "E-Government, Internet Adoption, and Corruption: An Empirical Investigation," World Development, Elsevier, vol. 57(C), pages 114-126.
    3. DeMaria, Federica & Franco, Chiara & Solferino, Nazaria, 2015. "Corruption and innovation: the mediating role of trade," AICCON Working Papers 139-2015, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    4. João Martins & Linda Veiga & Bruno Fernandes, 2023. "Are electronic government innovations helpful to deter corruption? Evidence from across the world," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 1177-1203, November.
    5. Majumderad, Monoj Kumar & Raghavan, Mala & Vespignani, Joaquin, 2020. "Oil Curse," MPRA Paper 101138, University Library of Munich, Germany, revised 2020.
    6. Majumder, Monoj Kumar & Raghavan, Mala & Vespignani, Joaquin, 2020. "Oil curse, economic growth and trade openness," Energy Economics, Elsevier, vol. 91(C).
    7. Shepherd, Ben, 2009. "Speed Money: Time, Corruption, and Trade," MPRA Paper 17337, University Library of Munich, Germany.
    8. James Fenske, 2014. "Ecology, Trade, And States In Pre-Colonial Africa," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 612-640, June.
    9. Van-Ha Le & Jakob de Haan & Erik Dietzenbacher & Jakob de Haan, 2013. "Do Higher Government Wages Reduce Corruption? Evidence Based on a Novel Dataset," CESifo Working Paper Series 4254, CESifo.
    10. Jha, Chandan Kumar & Sarangi, Sudipta, 2017. "Does social media reduce corruption?," Information Economics and Policy, Elsevier, vol. 39(C), pages 60-71.
    11. Gans-Morse, Jordan & Borges, Mariana & Makarin, Alexey & Mannah-Blankson, Theresa & Nickow, Andre & Zhang, Dong, 2018. "Reducing bureaucratic corruption: Interdisciplinary perspectives on what works," World Development, Elsevier, vol. 105(C), pages 171-188.
    12. Tereza Nìmeèková & Arshad Hayat, 2022. "Does trade openness improve the quality of domestic institutions? Evidence from Africa," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(4), pages 881-908, December.
    13. Felipe Starosta de Waldemar, 2010. "How costly is rent-seeking to diversification: an empirical approach," Documents de travail du Centre d'Economie de la Sorbonne 10008, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    14. Victoria Pistikou, 2020. "The Impact of CEFTA on Exports, Economic Growth and Development," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 13(3), pages 15-31, December.
    15. Amarendra SHARMA & Oscar CÁRDENAS, 2018. "Remittances and labour market outcomes: Evidence from Mexico," International Labour Review, International Labour Organization, vol. 157(2), pages 193-212, June.
    16. James Fenske, 2014. "Ecology, Trade, And States In Pre-Colonial Africa," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 612-640, 06.

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