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The Political Economics of Trade Openness and Its Impacts on Corruption

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  • Orhan Cengiz

    (Cukurova University, Pozanti Vocational School, Accounting and Tax Department, Adana, Turkey)

Abstract

Developing countries are exposed to various risks as they open their economies. While becoming more integrated with the global economy and removing trade barriers is expected to improve efficiency in resource allocation and increase welfare, in many countries this does not occur. In addition to the economic consequences of trade openness, its impact on political and institutional structures is significant for developing countries as removing trade barriers in pursuit of trade liberalization can lead to rent-seeking activities. This study investigates the impact of trade openness on corruption using the Augmented Mean Group (AMG) method with data from Turkey and selected MENA countries over the period 1996-2018. The results show that trade openness reduces control of corruption, while economic growth, the rule of law, and public expenditures increase control of corruption. In addition, Dumitrescu-Hurlin’s (2012) causality test findings reveal the existence of different linkages between variables.

Suggested Citation

  • Orhan Cengiz, 2021. "The Political Economics of Trade Openness and Its Impacts on Corruption," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 71(71-2), pages 499-525, December.
    • Handle: RePEc:ist:journl:v:71:y:2021:i:2:p:499-525
    DOI: 10.26650/ISTJECON2021-1003148
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    More about this item

    Keywords

    Trade openness; Corruption; Globalization JEL Classification: F19 ; F61 ; F68;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy

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