The Multifaceted Impact of Corruption on International Trade

Abstract

The purpose of this paper is to perform a detailed examination of corruption effects on trade based on corruption characteristics known to affect economic exchange within the corruption research field. These characteristics are the level, prevalence, customs location, function and predictability of corruption. The multifaceted corruption impact on trade is empirically examined using a corruption‐augmented gravity equation. The equation is estimated using a Heckman version of a GMM instrumental variable method. Our results provide strong evidence of that import flows vary systematically with the investigated corruption characteristics and enable the identification of channels through which corruption affects international trade. The empirical investigation clearly indicates the need to examine the multifaceted role of corruption to properly assess the trade effects of corruption.

Misreporting trade: Tariff evasion, corruption, and auditing standards

“… See Javorcik and Narciso (), Mishra et al (), Ferrantino et al (), Stoyanov (), Bouët and Roy (), and Epaphra (). Also see Berger and Nitsch (), which focuses on the world’s top five importers, and Buehn and Eichler (), which focuses on trade with the U.S. Vézina () examines misreported trade in natural resources, and Rotunno and Vézina () examines US apparel imports from China. …”

“… Since 1990 the United States and Canada have exchanged import data and substituted each other’s reported import data for their own reported export data, which are typically less reliable (Stoyanov ). …”

Instituciones y comercio internacional: el impacto de la corrupción

“…La corrupción presenta facetas diferenciadas que pueden influir en el grado en que la misma va a afectar al comercio internacional. Este hecho es el que destacan Thede y Gustafson (2009). Los matices provienen del nivel de gravedad que presenta dicho comportamiento (si la corrupción es severa puede limitar o incluso impedir las transacciones), de su prevalencia (lo que incrementa los costes de búsqueda de un socio honesto), de su función (puede obstruir la competencia en el mercado) o de su predictibilidad (cuanto más predecible es, menores costes supone).…”

A Non‐Proxied Empirical Investigation of Cultures Effect on Corruption

“…Why is the question of culture and corruption important for policy makers and business leaders? The negative effects of corruption on socio‐economic development (Mauro ; Mo ), institutional capacity (Collier ), human capital (Svensson ), government stability (Kaufmann et al ; Rose‐Ackerman and Palifka ), international trade (De Jong and Bogmans ; Thede and Gustafson ), foreign direct investment (Cols and Rodríguez‐Pose ; Mornah and Akpandjar ; Zhao, Kim, and Du ), trust in government (Chang and Chu ; Shleifer ), and globalization (Glynn, Kobrin, and Naim ; Lalountas et al ; Park and Khanoi ) are well documented. The drive to be competitive in global markets and to rid global business of unethical practices has led governmental, non‐governmental, and international organizations to continuously craft policies aimed at curbing corruption and promoting an ethical culture in international business (Getz and Volkema ).…”