Corruption, Financial Resources and Exports

21 Pages Posted: 21 Oct 2015

See all articles by Qing Liu

Qing Liu

Renmin University of China

Ruosi Lu

Beijing Technology and Business University

Xiangjun Ma

University of Virginia - College of Arts and Sciences

Date Written: November 2015

Abstract

This paper argues that a country's comparative advantage in exports depends on both the factor abundance and the allocation efficiency of the endowments. However, the latter is not considered in the traditional Heckscher–Ohlin model. In line with the “sand” view of corruption, this paper empirically studies the role of corruption in shaping a country's export pattern by distorting the allocation of financial resources. We find that the resource misallocation resulting from corruption undermines the export growth promoted by the positive external financial shock. The negative effects are realized by the extensive margins instead of the intensive margins of heterogeneous firms.

Suggested Citation

Liu, Qing and Lu, Ruosi and Ma, Xiangjun, Corruption, Financial Resources and Exports (November 2015). Review of International Economics, Vol. 23, Issue 5, pp. 1023-1043, 2015. Available at SSRN: https://ssrn.com/abstract=2676970 or http://dx.doi.org/10.1111/roie.12194

Qing Liu (Contact Author)

Renmin University of China ( email )

Ruosi Lu

Beijing Technology and Business University

No. 11/33, Fucheng Road, Haidian District
Liangxiang
Beijing, 102488
China

Xiangjun Ma

University of Virginia - College of Arts and Sciences ( email )

VA
United States

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