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Corruption and trade protection: evidence from panel data

Author

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  • Subhayu Bandyopadhyay
  • Suryadipta Roy

Abstract

This paper provides new estimates of the effects of corruption and poor institutions on trade protection. It exploits data on several measures of trade protection including import duty, international trade taxes, and the trade-GDP ratio. The paper complements the literature on the relationship between corruption and trade reform. It deviates from the previous literature in several ways. First, unobserved heterogeneity among countries have been controlled with properly specified fixed effects exploiting the time dimension present in the dataset. Secondly, instead of using tariff and non-tariff barriers, more general measures of trade protection have been used. The issue of endogeneity of corruption with respect to trade policy has been addressed using proper instruments for corruption used in previous studies. Moreover, two separate institutional measures have been used in the same regression to estimate their comparative impacts on trade policy. In general, we find that corruption and lack of contract enforcement have strong impacts to increase trade protection and negative effects on trade openness.

Suggested Citation

  • Subhayu Bandyopadhyay & Suryadipta Roy, 2007. "Corruption and trade protection: evidence from panel data," Working Papers 2007-022, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2007-022
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    File URL: http://research.stlouisfed.org/wp/2007/2007-022.pdf
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    Citations

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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. Cooray, Arusha & Jha, Chandan Kumar & Panda, Bibhudutta, 2023. "Corruption and assortative matching of partners in international trade," European Journal of Political Economy, Elsevier, vol. 77(C).
    3. Deepraj Mukherjee, 2018. "Corruption in International Business: Does Economic Globalization Help?," Global Business Review, International Management Institute, vol. 19(3), pages 623-634, June.
    4. 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.
    5. 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.
    6. 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.
    7. Marjit, Sugata & Mandal, Biswajit, 2009. "General Trading Costs in Pure Theory of International Trade," MPRA Paper 19290, University Library of Munich, Germany.
    8. Victoria Pistikou, 2020. "The Impact of CEFTA on Exports, Economic Growth and Development," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 13(3), pages 15-31, December.
    9. repec:kap:iaecre:v:17:y:2011:i:2:p:224-235 is not listed on IDEAS
    10. Yaron Zelekha & Eyal Sharabi, 2012. "Corruption, institutions and trade," Economics of Governance, Springer, vol. 13(2), pages 169-192, June.
    11. 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.
    12. Mohammad Sharif Karimi & Mehran Malekshahian, 2018. "Ricardian Comparative Advantage: Impact of Specialization on the Exportation of Products in ASEAN Countries," Annals of Economics and Finance, Society for AEF, vol. 19(2), pages 473-522, November.
    13. Harb George, 2010. "Communication Infrastructures, Institutional Efficiency and EU-Arab Trade: Assessment and Implications," Review of Middle East Economics and Finance, De Gruyter, vol. 6(2), pages 49-73, November.
    14. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
    15. Michael, Bryane & Popov, Maja, 2012. "Do Customs Trade Facilitation Programmes Help Reduce Customs-Related Corruption?," EconStor Preprints 109021, ZBW - Leibniz Information Centre for Economics.
    16. Chaudhuri, Sarbajit & Mandal, Biswajit, 2012. "Bureaucratic reform, informal sector and welfare," MPRA Paper 36072, University Library of Munich, Germany.

    More about this item

    Keywords

    Corruption; Tariff; International trade;
    All these keywords.

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