Université de Lausanne
Ecole des HEC
Département d'économétrie et d'économie politique

Jeudi 11 octobre 2007, 12h15
Internef, Dorigny, salle 231

Daniel TRACA
(Solvay Business School, Université Libre de Bruxelles, Belgique)

Corruption and Bilateral Trade Flows: Extortion or Evasion?

Abstract
This paper analyzes the impact of corruption on bilateral trade flows, highlighting the dual role of corruption in terms of extortion and evasion. While corrupt customs officials in the importing country may extort bribes from exporters they may also allow exporters to evade tariff barriers. The paper sets up a theoretical model which shows that the effect of corruption on trade flows is non-linear and must take into account the level of nominal tariffs. In particular, the model predicts that while corruption impedes trade in an environment of low tariffs, it may create trade enhancing effects, when nominal tariffs are high. We also show that the trade enhancing effect dominates at low levels of corruption, suggesting that, at high tariffs, trade flows are an inverted-U shaped function of corruption. These predictions are borne out in the data, within the framework of an augmented gravity model. The trade enhancing effect dominates for about 23% of the observations.

Site web du séminaire (avec texte en ligne): http://www.hec.unil.ch/deep/evenements-english/e-sem-all-2007-08.htm