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Governance, Corruption and Trade : A North-South Approach

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  • Lavallée, Emmanuelle
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    Abstract

    The purpose of this paper is to assess the effect on North South trade of the quality of governance in developing countries by applying a gravity trade model. I test the model for a sample of 21 OECD countries and 95 developing countries over the period 1984-1997. A panel data analysis is used to disentangle the time invariant country-specific effects and to capture the relationship between the relevant variables over time. The estimation results show that the better governed a developing country is, the more it imports goods from industrialised ones. Besides, thanks to a non linear approximation, it shows that the two traditional visions of the consequences of corruption on trade coexist.

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    File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/4090/1/cah0504.pdf
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    Bibliographic Info

    Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/4090.

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    Date of creation: May 2005
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    Handle: RePEc:dau:papers:123456789/4090

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    Related research

    Keywords: Bilateral trade flows; panel econometrics; gravity model; corruption; governance;

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    1. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
    2. Rose, Andrew K, 2004. "Does the WTO Make Trade More Stable?," CEPR Discussion Papers 4246, C.E.P.R. Discussion Papers.
    3. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    4. Peter Egger, . "A Note on the Proper Econometric Specification of the Gravity Equation," WIFO Working Papers 108, WIFO.
    5. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
    6. Arvind Subramanian & Shang-Jin Wei, 2003. "The WTO Promotes Trade, Strongly But Unevenly," NBER Working Papers 10024, National Bureau of Economic Research, Inc.
    7. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    8. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
    9. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
    10. James E. Anderson & Douglas Marcouiller, S.J., 1999. "Insecurity and the Pattern of Trade: An Empirical Investigation," Boston College Working Papers in Economics 418, Boston College Department of Economics, revised 03 Aug 2000.
    11. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
    12. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
    13. Alberto Chong & Luisa Zanforlin, 2000. "Law tradition and institutional quality: some empirical evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(8), pages 1057-1068.
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