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Impact of Corruption on Firm Level Export Decisions

This paper examines the impact of corruption on the self-selection of firms into domestic and export markets. The 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 24,000 firms in more than 90 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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File URL: http://web.williams.edu/Economics/wp/OlneyCorruptionandExporting-July2013.pdf
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Paper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2013-04.

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Length: 42 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:wil:wileco:2013-04
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