Corruption, trade costs, and gains from tariff liberalization: evidence from Southern Africa

Sandra Sequeira

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper exploits quasi-experimental variation in tariffs in southern Africa to estimate trade elasticities. Traded quantities respond only weakly to a 30 percent reduction in the average nominal tariff rate. Trade flow data combined with primary data on firm behavior and bribe payments suggest that corruption is a potential explanation for the observed low elasticities. In contexts of pervasive corruption, even small bribes can significantly reduce tariffs, making tariff liberalization schemes less likely to affect the extensive and the intensive margins of firms' import behavior. The tariff liberalization scheme is, however, still associated with improved incentives to accurately report quantities of imported goods, and with a significant reduction in bribe transfers from importers to public officials.

JEL-codes: D73 F13 H83 O17 O19 O24 (search for similar items in EconPapers)
Date: 2016-10-01
New Economics Papers: this item is included in nep-agr, nep-dev and nep-int
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Citations: View citations in EconPapers (54)

Published in American Economic Review, 1, October, 2016, 106(10), pp. 3029-3063. ISSN: 0002-8282

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Related works:
Journal Article: Corruption, Trade Costs, and Gains from Tariff Liberalization: Evidence from Southern Africa (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:68286

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