Trade Protection and Bureaucratic Corruption: An Empirical Investigation

29 Pages Posted: 20 Jan 2009  

Pushan Dutt

INSEAD - Economics and Political Sciences

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Abstract

We examine whether protectionist trade policies lead to increased bureaucratic corruption. Using multiple measures of corruption and trade policies, we find strong evidence that corruption is significantly higher in countries with protectionist trade policies. These results are robust to endogeneity concerns. Next, a panel-data-based GMM methodology is used to estimate a dynamic model of corruption. This estimator controls for country-specific effects, potential endogeneity of trade policy, and existence of measurement errors afflicting the corruption data. The paper strengthens the case for trade liberalization and argues that trade reforms may lead to improvements in governance.

JEL Classification: F13, D73

Suggested Citation

Dutt, Pushan, Trade Protection and Bureaucratic Corruption: An Empirical Investigation. Canadian Journal of Economics, Vol. 42, Issue 1, pp. 155-183, February 2009. Available at SSRN: https://ssrn.com/abstract=1330601 or http://dx.doi.org/10.1111/j.1540-5982.2008.01503.x

Pushan Dutt (Contact Author)

INSEAD - Economics and Political Sciences ( email )

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HOME PAGE: http://faculty.insead.edu/pushan-dutt/

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