Abstract
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.
The views expressed are those of the authors and do not necessarily represent official positions of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.
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Notes
- 1.
For the tobacco industry, bilateral trade data have been reported for 87 exporting countries and 91 importing countries.
- 2.
The effects of the time-invariant variables on bilateral imports in the random effects model are found to be exactly similar to that for bilateral exports. Imports are found to be positively associated with sharing a common border, having a common colonial heritage, and sharing a common language, while negatively associated with distance between the trading partners. The results can be obtained from the authors on request.
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Appendix 1
Appendix 1
List of countries used in the fixed effect regressions:
Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Bulgaria, Bolivia, Brazil, Botswana, Canada, Chile, China, Cameroon, Colombia, Costa Rica, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, El Salvador, Ethiopia, Finland, France, Gabon, Germany, Ghana, Greece, Guatemala, Hong Kong, Honduras, Hungary, Indonesia, India, Ireland, Iran, Iceland, Israel, Italy, Ivory Coast, Jordan, Japan, Kenya, Kuwait, Lithuania, Latvia, Morocco, Moldova, Mexico, Malta, Mongolia, Mozambique, Malawi, Malaysia, Nigeria, Netherlands, Norway, New Zealand, Oman, Pakistan, Panama, Peru, Philippines, Poland, Portugal, Romania, Russia, Senegal, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, Tanzania, Uganda, Ukraine, United Kingdom, Uruguay, United States, Venezuela, Yemen.
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Bandyopadhyay, S., Roy, S. (2016). The Effects of Corruption on Trade Flows: A Disaggregated Analysis. In: Roy, M., Sinha Roy, S. (eds) International Trade and International Finance. Springer, New Delhi. https://doi.org/10.1007/978-81-322-2797-7_6
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DOI: https://doi.org/10.1007/978-81-322-2797-7_6
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