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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.

Suggested Citation

  • Pushan Dutt, 2009. "Trade protection and bureaucratic corruption: an empirical investigation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 155-183, February.
    • Handle: RePEc:cje:issued:v:42:y:2009:i:1:p:155-183
    DOI: 10.1111/j.1540-5982.2008.01503.x
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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