How export shocks corrupt: theory and evidence

Joël Cariolle and Petros Sekeris

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Abstract: In this article we uncover a positive effect of both export booms and busts on firm-level corruption. Our theory underlines the central role played by human capital in the underlying mechanism. In low human capital settings, export-related revenues are highly elastic to incremental gains of export shares, thence pushing firms to intensify corruption with export busts so as to avoid a radical drop in their revenues. In high human capital settings, export booms lead to more corruption as an increment of export share achieved through bribery concerns a large export market. We corroborate these findings with an extensive database of some 45,000 firms from 72 developing and transition economies, surveyed over 2006-2017. Besides confirming that export booms and busts corrupt and highlighting the mediating role of human capital, we also highlight the corruption-deterrent effect institutions during export market expansion and contraction.

Keywords: Corruption; Bribery; Export shocks; Human capital (search for similar items in EconPapers)
Date: 2021-02-11
New Economics Papers: this item is included in nep-cwa and nep-int
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Working Paper: How export shocks corrupt: Theory and evidence (2023)
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