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Impact of Corruption on Firm-Level Export Decisions

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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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    2. Yakira Fernández-Torres & Milagros Gutiérrez-Fernández & Julián Ramajo-Hernández, 2018. "Business Regulation And Economic Growth: The Indirect Effect Of Corruption In Latin America And The Caribbean," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-22, March.
    3. Kapri, Kul, 2019. "Impact of political instability on firm-level export decisions," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 98-105.
    4. Joël Cariolle & Petros G Sekeris, 2021. "How export shocks corrupt: theory and evidence," Working Papers hal-03164648, HAL.
    5. 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.
    6. Chan, Jackie M.L., 2019. "Financial frictions and trade intermediation: Theory and evidence," European Economic Review, Elsevier, vol. 119(C), pages 567-593.
    7. Olayinka Oyekola & Martha A. Omolo & Olapeju C. Ogunmokun, 2023. "Are majority-female-owned firms more susceptible to bribery solicitations?," Discussion Papers 2311, University of Exeter, Department of Economics.
    8. Wu, Tao & Delios, Andrew & Chen, Zhaowei & Wang, Xin, 2023. "Rethinking corruption in international business: An empirical review," Journal of World Business, Elsevier, vol. 58(2).
    9. Kapri, Kul, 2021. "Court fairness and firm level export decisions," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 269-277.
    10. Ackah, Charles Godfred & Görg, Holger & Hanley, Aoife & Hornok, Cecília, 2020. "Why are Africa's female entrepreneurs not playing the export game? Evidence from Ghana," Kiel Working Papers 2168, Kiel Institute for the World Economy.
    11. Daunfeldt, Sven-Olov & Engberg, Erik & Halvarsson, Daniel & Kokko, Ari & Tingvall, Patrik, 2019. "Wholesale firms: A catalyst for Swedish exports?," Ratio Working Papers 328, The Ratio Institute.
    12. 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.
    13. Manolopoulos, Dimitris & Chatzopoulou, Erifili & Kottaridi, Constantina, 2018. "Resources, home institutional context and SMEs’ exporting: Direct relationships and contingency effects," International Business Review, Elsevier, vol. 27(5), pages 993-1006.
    14. Mamadou Bah & Henri Atangana Ondoa & Koffi Délali Kpognon, 2021. "Effects of governance quality on exports in Sub-Saharan Africa," International Economics, CEPII research center, issue 167, pages 1-14.
    15. Krammer, Sorin M.S. & Strange, Roger & Lashitew, Addisu, 2018. "The export performance of emerging economy firms: The influence of firm capabilities and institutional environments," International Business Review, Elsevier, vol. 27(1), pages 218-230.
    16. Qi, Guoyou & Zou, Hailiang & Xie, Xuemei & Meng, Xiaohua & Fan, Tijun & Cao, Yuanhe, 2020. "Obedience or escape: Examining the contingency influences of corruption on firm exports," Journal of Business Research, Elsevier, vol. 106(C), pages 261-272.
    17. William W. Olney, 2022. "Intra-African trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 25-51, February.
    18. repec:bjc:journl:v:8:y:2022:i:10:p:84-88 is not listed on IDEAS
    19. Phan, Trang Hoai & Stachuletz, Rainer, 2022. "Bribery - Export Nexus under the Firm’s Growth Obstacles," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 132144, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).

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    JEL classification:

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

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