Does corruption facilitate trade for the new EU members?
The paper uses a gravity model to examine the role of corruption in the direction of trade in a data set comprising OECD economies, new EU members and developing nations. Contrary to a number of studies, the findings suggest that membership of the RTAs does not always increase bilateral trade whereas reducing a country's corruption does tend to increase trade flows. The results suggest that EU membership, with the associated improvement in the perceived level of corruption, should have a positive impact on Romania and Bulgaria.
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- Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
- K. Kalirajan, 1999. "Stochastic varying coefficients gravity model: An application in trade analysis," Journal of Applied Statistics, Taylor & Francis Journals, vol. 26(2), pages 185-193.
- Ghosh, Sucharita & Yamarik, Steven, 2004. "Does trade creation measure up? A reexamination of the effects of regional trading arrangements," Economics Letters, Elsevier, vol. 82(2), pages 213-219, February.
- Repkine, Alexandre & Walsh, Patrick Paul, 1999. "Evidence of European Trade and Investment U-Shaping Industrial Output in Bulgaria, Hungary, Poland, and Romania," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 730-752, December.
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