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Corruption and Trade Protection: Evidence from Panel Data


  • Subhayu Bandyopadhyay

    (Department of Economics, West Virginia University)

  • Suryadipta Roy

    (Department of Economics, Lawrence University)


We complement the existing literature on corruption and trade policy by providing new estimates of the effects of corruption (and institutions) on trade protection. We control for unobserved heterogeneity among countries with properly specified fixed effects, exploiting the time dimension present in the dataset. The issue of endogeneity of corruption with respect to trade policy is addressed. Furthermore, two separate institutional measures are used in the same regression to estimate their comparative impacts on trade policy. The central finding is that corruption and lack of contract enforcement significantly increase trade protection and have negative effects on trade openness.

Suggested Citation

  • Subhayu Bandyopadhyay & Suryadipta Roy, 2006. "Corruption and Trade Protection: Evidence from Panel Data," Working Papers 06-11 Classification- JEL, Department of Economics, West Virginia University.
  • Handle: RePEc:wvu:wpaper:06-11

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    References listed on IDEAS

    1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    2. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    3. Roberta Gatti, 2004. "Explaining corruption: are open countries less corrupt?," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(6), pages 851-861.
    4. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    5. Pedro Bernal & Sebastian Martinez & Pablo Celhay, 2018. "Is Results-Based Aid More Effective than Conventional Aid?: Evidence from the Health Sector in El Salvador," IDB Publications (Working Papers) 8750, Inter-American Development Bank.
    6. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    7. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
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    Cited by:

    1. Bengt Söderlund & Patrik Tingvall, 2014. "Dynamic effects of institutions on firm-level exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 277-308, May.
    2. Mohammad Mahdi Ghodsi, 2012. "Corruption and the Level of Trade Protectionism," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 30.
    3. Karpaty, Patrik & Gustavsson Tingvall, Patrik, 2011. "Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?," Working Papers 2011:2, Örebro University, School of Business, revised 28 May 2012.
    4. Hasan Faruq & Ashley Taylor, 2011. "Quality of Education, Economic Performance and Institutional Environment," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(2), pages 224-235, May.
    5. Veysel Avsar & Alexis Habiyaremye & Umut Unal, 2016. "Does Corruption Increase Antidumping Investigations?," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 660-665.
    6. Faiz-Ur-Rehman & Mohammad Nasir & Amanat Ali, 2007. "Corruption, Trade Openness, and Environmental Quality: A Panel Data Analysis of Selected South Asian Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 673-688.
    7. repec:kap:iaecre:v:17:y:2011:i:2:p:224-235 is not listed on IDEAS
    8. Nabamita Dutta & Deepraj Mukherjee, 2016. "Do Literacy And A Mature Democratic Regime Cure Corruption?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 41(2), pages 1-26, June.
    9. Yaron Zelekha & Eyal Sharabi, 2012. "Corruption, institutions and trade," Economics of Governance, Springer, vol. 13(2), pages 169-192, June.
    10. Patrik Karpaty & Patrik Tingvall, 2015. "Service Offshoring and Corruption: Do Firms Escape Corrupt Countries?," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 363-381, December.
    11. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
    12. Michael, Bryane & Popov, Maja, 2012. "Do Customs Trade Facilitation Programmes Help Reduce Customs-Related Corruption?," EconStor Preprints 109021, ZBW - German National Library of Economics.
    13. Chaudhuri, Sarbajit & Mandal, Biswajit, 2012. "Bureaucratic reform, informal sector and welfare," MPRA Paper 36072, University Library of Munich, Germany.


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