Corruption and trade protection: evidence from panel data
AbstractThis paper provides new estimates of the effects of corruption and poor institutions on trade protection. It exploits data on several measures of trade protection including import duty, international trade taxes, and the trade-GDP ratio. The paper complements the literature on the relationship between corruption and trade reform. It deviates from the previous literature in several ways. First, unobserved heterogeneity among countries have been controlled with properly specified fixed effects exploiting the time dimension present in the dataset. Secondly, instead of using tariff and non-tariff barriers, more general measures of trade protection have been used. The issue of endogeneity of corruption with respect to trade policy has been addressed using proper instruments for corruption used in previous studies. Moreover, two separate institutional measures have been used in the same regression to estimate their comparative impacts on trade policy. In general, we find that corruption and lack of contract enforcement have strong impacts to increase trade protection and negative effects on trade openness.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2007-022.
Date of creation: 2007
Date of revision:
Other versions of this item:
- Subhayu Bandyopadhyay & Suryadipta Roy, 2006. "Corruption and Trade Protection: Evidence from Panel Data," Working Papers 06-11 Classification- JEL, Department of Economics, West Virginia University.
- NEP-ALL-2007-06-23 (All new papers)
- NEP-DEV-2007-06-23 (Development)
- NEP-POL-2007-06-23 (Positive Political Economics)
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