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Does Corruption Attenuate the Effect of Red Tape on Exports

Reshad Ahsan ()

Department of Economics - Working Papers Series from The University of Melbourne

Abstract: In this paper I show that corruption can attenuate the adverse effects of customs-related red tape on firm exports. I first develop a model where exporters use bribes to encourage customs officials to process their documents in an expedited manner. This lowers the delay that they face at customs. The model shows that if the value of the reduced delays is greater than the bribe payment itself, then corruption can attenuate the adverse effects of customs-related red tape. I then use firm-level data to confirm that this attenuating effect exists. I find that the negative effect of greater red tape on firm exports is lower for firms in industries and countries where corruption at customs is more prevalent. This result suggest that, conditional on there being customs-related red tape, an exporter is better off if it can use bribes to lower the delay that it faces.

Keywords: Exports; Customs; Corruption (search for similar items in EconPapers)
JEL-codes: F10 F14 K42 (search for similar items in EconPapers)
Pages: 47
Date: 2015-08
New Economics Papers: this item is included in nep-law
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Journal Article: DOES CORRUPTION ATTENUATE THE EFFECT OF RED TAPE ON EXPORTS? (2017) Downloads
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