Does Corruption Attenuate the Effect of Red Tape on Exports?
Economic Inquiry, 55(3): July 2017, 1192-1212.
Does Corruption Attenuate the Effect of Red Tape on Exports?
Economic Inquiry, 55(3): July 2017, 1192-1212.
Abstract: In this paper I use firm-level data to examine whether corruption can attenuate the adverse effects of customs-related red tape on exports. I find that the negative effect of red tape on exports is lower for firms in industries and countries where corruption at customs is more prevalent. This suggests that, conditional on there being customs-related red tape, a firm is better off if it can use bribes to lower the delay that it faces. However, I also find that corruption has a negative overall effect on a firm's decision to export. That is, corruption prevents some firms from entering the export market. Taken together, these results suggest that even if corruption does allow some firms to attenuate the red tape that that it faces, the overall effect of corruption need not be positive. To gauge the overall effect, we must compare the red-tape attenuating effects of corruption against its adverse effect on a firm's decision to export.