The Effects of Corruption on Trade Flows: A Disaggregated Analysis



This paper analyzes the effects of corruption on trade flows for a panel of nations. The novelty of the paper lies in our focus on trade flows at the industry level. Such a focus is important because the emerging literature on trade and institutions suggests that the pattern of comparative advantage between nations may be driven by international differences in institutions, among other factors. We find that exports of certain goods by the developed nations are negatively affected by higher domestic corruption in these nations. Interestingly, corruption in the trading partner also reduces exports of certain goods. Imports seem somewhat less vulnerable to corruption. The analysis uncovers considerable heterogeneity in the effects of corruption on different industries.


Foreign Direct Investment Gross Domestic Product Gravity Model Trade Cost Bilateral Trade 
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Copyright information

© Springer India 2016

Authors and Affiliations

  1. 1.Federal Reserve Bank of St. Louis, Research DivisionSt. LouisUSA
  2. 2.IZABonnGermany
  3. 3.Department of EconomicsEarl N. Phillips School of Business, High Point UniversityHigh PointUSA

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