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Corruption and Trade Protection: Evidence from Panel Data

Subhayu Bandyopadhyay () and Suryadipta Roy ()

No 06-11 Classification- JEL: F1; F13, Working Papers from Department of Economics, West Virginia University

Abstract: We complement the existing literature on corruption and trade policy by providing new estimates of the effects of corruption (and institutions) on trade protection. We control for unobserved heterogeneity among countries with properly specified fixed effects, exploiting the time dimension present in the dataset. The issue of endogeneity of corruption with respect to trade policy is addressed. Furthermore, two separate institutional measures are used in the same regression to estimate their comparative impacts on trade policy. The central finding is that corruption and lack of contract enforcement significantly increase trade protection and have negative effects on trade openness.

Keywords: Corruption; Trade Policy; Contract Enforcement; Endogenous Tariffs. (search for similar items in EconPapers)
Date: 2006
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