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Does Corruption Attenuate The Effect Of Red Tape On Exports?

Economic Inquiry

Published online on

Abstract

I use firm ‐level data to examine whether corruption attenuates the adverse effects of red tape on exports. I find 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. These results suggest that to gauge the overall effect of corruption, we must compare its red‐tape attenuating effect with its adverse effect on a firm's decision to export. (JEL F10, F14, K42)