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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.

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File URL: http://www.be.wvu.edu/phd_economics/pdf/06-11.pdf
File Function: First version, 2006
Download Restriction: no

Paper provided by Department of Economics, West Virginia University in its series Working Papers with number 06-11 Classification- JEL: F1; F13.

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Length: 23 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:wvu:wpaper:06-11
Contact details of provider: Postal: P.O. Box 6025, Morgantown, WV 26506-6025
Phone: (304) 293-7859
Fax: (304) 293-2233
Web page: http://www.be.wvu.edu/phd_economics/
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  1. Roberta Gatti, 2004. "Explaining corruption: are open countries less corrupt?," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(6), pages 851-861.
  2. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
  3. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
  4. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  5. Dani Rodrik, 2000. "Trade Policy Reform as Institutional Reform," 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. 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.
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