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Does Corruption Attenuate the Effect of Red Tape on Exports

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In this paper I show that corruption can attenuate the adverse effects of customs-related red tape on firm exports. I first develop a model where exporters use bribes to encourage customs officials to process their documents in an expedited manner. This lowers the delay that they face at customs. The model shows that if the value of the reduced delays is greater than the bribe payment itself, then corruption can attenuate the adverse effects of customs-related red tape. I then use firm-level data to confirm that this attenuating effect exists. I find that the negative effect of greater red tape on firm exports is lower for firms in industries and countries where corruption at customs is more prevalent. This result suggest that, conditional on there being customs-related red tape, an exporter is better off if it can use bribes to lower the delay that it faces.

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  • Reshad N. Ahsan, 2015. "Does Corruption Attenuate the Effect of Red Tape on Exports," Department of Economics - Working Papers Series 2015, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:2015
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    Cited by:

    1. Joël Cariolle & Petros G Sekeris, 2021. "How export shocks corrupt: theory and evidence," Working Papers hal-03164648, HAL.
    2. Audretsch, David B. & Belitski, Maksim & Chowdhury, Farzana & Desai, Sameeksha, 2022. "CEO gender, institutional context and firm exports," International Business Review, Elsevier, vol. 31(5).
    3. Kamal, Fariha & Sundaram, Asha, 2019. "Do institutions determine economic Geography? Evidence from the concentration of foreign suppliers," Journal of Urban Economics, Elsevier, vol. 110(C), pages 89-101.
    4. Spyridon Boikos & Mehmet Pinar & Thanasis Stengos, 2023. "Bribery, on-the-job training, and firm performance," Small Business Economics, Springer, vol. 60(1), pages 37-58, January.

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    More about this item

    Keywords

    Exports; Customs; Corruption;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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