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Corruption and Trade Protection: Evidence from Panel Data

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Author Info

  • Subhayu Bandyopadhyay

    (Department of Economics, West Virginia University)

  • Suryadipta Roy

    (Department of Economics, Lawrence University)

Abstract

We complement the existing literature on corruption and trade policy by providing new estimates of the effects of corruption (and institutions) on trade protection. We control for unobserved heterogeneity among countries with properly specified fixed effects, exploiting the time dimension present in the dataset. The issue of endogeneity of corruption with respect to trade policy is addressed. Furthermore, two separate institutional measures are used in the same regression to estimate their comparative impacts on trade policy. The central finding is that corruption and lack of contract enforcement significantly increase trade protection and have negative effects on trade openness.

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File URL: http://www.be.wvu.edu/phd_economics/pdf/06-11.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by Department of Economics, West Virginia University in its series Working Papers with number 06-11 Classification- JEL: F1; F13.

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Length: 23 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:wvu:wpaper:06-11

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Web page: http://www.be.wvu.edu/phd_economics/
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Related research

Keywords: Corruption; Trade Policy; Contract Enforcement; Endogenous Tariffs.;

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References

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  1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  2. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  3. Dani Rodrik, 2000. "Trade Policy Reform as Institutional Reform," IDB Publications 8750, Inter-American Development Bank.
  4. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
  5. Roberta Gatti, 2004. "Explaining corruption: are open countries less corrupt?," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(6), pages 851-861.
  6. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
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Citations

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Cited by:
  1. Söderlund, Bengt & Gustavsson Tingvall, Patrik, 2012. "Dynamic Effects of Institutions on Firm-Level Exports," Ratio Working Papers 184, The Ratio Institute.
  2. Karpaty, Patrik & Gustavsson Tingvall, Patrik, 2012. "Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?," Ratio Working Papers 192, The Ratio Institute.
  3. Hasan Faruq & Ashley Taylor, 2011. "Quality of Education, Economic Performance and Institutional Environment," International Advances in Economic Research, Springer, vol. 17(2), pages 224-235, May.
  4. Yaron Zelekha & Eyal Sharabi, 2012. "Corruption, institutions and trade," Economics of Governance, Springer, vol. 13(2), pages 169-192, June.
  5. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
  6. Chaudhuri, Sarbajit & Mandal, Biswajit, 2012. "Bureaucratic reform, informal sector and welfare," MPRA Paper 36072, University Library of Munich, Germany.

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