Corruption and Bilateral Trade Flows : Extortion or Evasion ?

  title={Corruption and Bilateral Trade Flows : Extortion or Evasion ?},
  author={Pushan Dutt and Daniel Traca},
This paper looks at the role of corruption as a barrier to imports, highlighting the interaction with nominal tariffs. It shows that the effect of corruption is non-linear and must take into account the level of nominal tariffs. In particular, we show that, while corruption taxes trade in an environment of low tariffs, it may create trade enhancing effects, when nominal tariffs are high. The trade enhancing effect dominates at low levels of corruption, suggesting that, at high tariffs, trade… CONTINUE READING
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