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Impact of Corruption on Firm-Level Export Decisions

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Abstract

This paper examines the impact of corruption on the self-selection of firms into domestic and export markets. A heterogeneous firm model predicts that corruption decreases the probability that a firm only sells domestically, increases the probability that a firm exports indirectly through an intermediary, and decreases the probability that a firm exports directly. The propositions of the model are tested using a comprehensive data set of over 23,000 firms in 80 developing countries. The results confirm both the self-selection of firms according to their productivity and the anticipated impact of corruption. This indicates that in developing countries where corruption is especially severe, intermediaries provide a crucial link to global markets.

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  • William W. Olney, 2013. "Impact of Corruption on Firm-Level Export Decisions," Department of Economics Working Papers 2013-04, Department of Economics, Williams College, revised Jan 2015.
  • Handle: RePEc:wil:wileco:2013-04
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    File URL: https://web.williams.edu/Economics/wp/OlneyCorruptionandExporting-July2013.pdf
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    Citations

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    Cited by:

    1. Reshad N. Ahsan, 2017. "Does Corruption Attenuate The Effect Of Red Tape On Exports?," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1192-1212, July.
    2. Issar Akash & Lim Jamus Jerome & Mohapatra, Sanket, 2017. "Institutional Quality and International Differences in Firm Productivity," IIMA Working Papers WP 2017-02-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    3. repec:eee:iburev:v:27:y:2018:i:5:p:993-1006 is not listed on IDEAS
    4. repec:eee:iburev:v:27:y:2018:i:1:p:218-230 is not listed on IDEAS
    5. repec:eee:reveco:v:59:y:2019:i:c:p:98-105 is not listed on IDEAS
    6. Jackie M.L. Chan, 2015. "Trade Intermediation, Financial Frictions, and the Gains from Trade," Discussion Papers 15-009, Stanford Institute for Economic Policy Research.

    More about this item

    Keywords

    Corruption; Exports; Intermediaries;

    JEL classification:

    • F1 - International Economics - - Trade
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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