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The Multifaceted Impact of Corruption on International Trade

Author

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  • Thede, Susanna

    (Department of Economics, Lund University)

  • Gustafson, Nils-Åke

    (Department of Economics, Lund University)

Abstract

The purpose of this paper is to perform a detailed examination of corruption effects on trade based on corruption characteristics known to affect economic exchange within the corruption research field. These characteristics are the level, prevalence, customs location, function and predictability of corruption. The multifaceted corruption impact on trade is empirically examined using a corruption-augmented gravity equation. The equation is estimated using a Heckman version of a GMM instrumental variable method. Our results provide strong evidence of that import flows vary systematically with the investigated corruption characteristics and enable the identification of channels through which corruption affects international trade. The empirical investigation clearly indicates the need to examine the multifaceted role of corruption to properly assess the trade effects of corruption.

Suggested Citation

  • Thede, Susanna & Gustafson, Nils-Åke, 2009. "The Multifaceted Impact of Corruption on International Trade," Working Papers 2009:13, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2009_013
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    Cited by:

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    2. Juan C. Correa & Klaus Jaffe, 2015. "Corruption and Wealth: Unveiling a national prosperity syndrome in Europe," Papers 1604.00283, arXiv.org.
    3. Makochekanwa, Albert, 2014. "The impact of corruption on intra-SADC trade in agrifood products," Conference papers 332484, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Cooray, Arusha & Jha, Chandan Kumar & Panda, Bibhudutta, 2023. "Corruption and assortative matching of partners in international trade," European Journal of Political Economy, Elsevier, vol. 77(C).
    5. Paulus, Michal & Kristoufek, Ladislav, 2015. "Worldwide clustering of the corruption perception," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 428(C), pages 351-358.
    6. Lin, Chin-Ho, 2018. "Tariff evasion in machinery production networks: Evidence from East Asia," Economic Modelling, Elsevier, vol. 70(C), pages 115-126.
    7. Lucio Cappelli & Antonella Pisano & Enrica Iannucci & Patrizia Papetti & Fabrizio D'Ascenzo & Roberto Ruggieri, 2024. "Digitalization and prevention of corruption: Opportunities and risks—Some evidence from the Italian university system," Business Strategy and the Environment, Wiley Blackwell, vol. 33(1), pages 81-94, January.
    8. Salvador Gil-Pareja & Rafael Llorca-Vivero & José Antonio Martínez-Serrano, 2017. "Corruption and International Trade: A Comprehensive Analysis with Gravity," Working Papers 1705, Department of Applied Economics II, Universidad de Valencia.
    9. Abuzayed, Bana & Ben Ammar, Mouldi & Molyneux, Philip & Al-Fayoumi, Nedal, 2024. "Corruption, lending and bank performance," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 802-830.
    10. Andrzej Cieślik & Łukasz Goczek, 2015. "Corruption and Export Performance in Post-communist Countries: Evidence from Firm-level Data," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 42.
    11. Frank R. Gunter, 2013. "The Political Economy of Iraq," Books, Edward Elgar Publishing, number 14293.
    12. Abdulkareem Alhassan & Joshua Dzankar Zoaka & Salim Hamza Ringim, 2021. "Africa as headwaiter at the dining table of global value chains: Do institutions matter for her participation?," African Development Review, African Development Bank, vol. 33(3), pages 560-576, September.
    13. Yevhen Hrechyn & Vasyl Burba, 2018. "Crime In Foreign Economic Sphere In The Post-Soviet States," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(5).
    14. repec:prg:jnlpep:v:preprint:id:647:p:1-19 is not listed on IDEAS
    15. Shahedul Alam Khan & Rumana Mubin, 2019. "Trade, Governance And The Mediating Role Of Innovation," Romanian Economic Business Review, Romanian-American University, vol. 14(3), pages 29-43, September.
    16. Aboushady, Nora & Zaki, Chahir, 2023. "Are global value chains for sale? On business-state relations in the MENA region," IDOS Discussion Papers 17/2023, German Institute of Development and Sustainability (IDOS).
    17. Mohammad Sharif Karimi & Mehran Malekshahian, 2018. "Ricardian Comparative Advantage: Impact of Specialization on the Exportation of Products in ASEAN Countries," Annals of Economics and Finance, Society for AEF, vol. 19(2), pages 473-522, November.
    18. Paitoon Chetthamrongchai & Kittisak Jermsittiparsert & Sakapas Saengchai, 2020. "How the nexus among the free trade, institutional quality and economic growth ffect the trade from ASEAN countries," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(3), pages 2079-2094, March.
    19. Esteve-Pérez Silviano & Gil-Pareja Salvador & Llorca-Vivero Rafael & Paniagua Jordi, 2021. "Corruption and International Trade: A Re-assessment with Intra-National Flows," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 15(1), pages 187-198, January.
    20. Marek Tomaszewski, 2018. "Corruption - A Dark Side of Entrepreneurship. Corruption and Innovations," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(3), pages 251-269.
    21. Othmani, Abdelhafidh & Slimani, Slah & Bakari, Sayef, 2015. "Les Effets de la Corruption sur le Commerce Extérieur de la Tunisie : Une Approche du Modèle de Gravité Statique durant la Période 1999-2012," MPRA Paper 80894, University Library of Munich, Germany.
    22. Othmani, Abdelhafidh & Slimani, Slah & Bakari, Sayef, 2015. "Les Effets de la Concurrence sur le Commerce Extérieur de la Tunisie : Une Approche du Modèle de Gravité Statique durant la Période 1999-2012 [The Effects of Competition on Foreign Trade in Tunisia," MPRA Paper 80885, University Library of Munich, Germany.

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    More about this item

    Keywords

    Bilateral trade; Corruption; GMM Estimations;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F10 - International Economics - - Trade - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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