Does corruption discourage international trade?

We use measures of trade-related corruption to investigate the effects of corruption on international trade and compare the results with those of corruption in general. We distinguish corruption in an exporting economy from that in an importing economy. Both distinctions appear to be important. Corruption in general hampers international trade, whereas bribe paying to customs enhances imports. This effect is most robust in importing countries with inefficient customs. High waiting times at the border significantly reduce international trade. The effects of unpredictability of corruption and policies are inconclusive.

Research Highlights► This paper distinguishes the effect of corruption on imports from that on exports. ► Corruption in general hampers international trade. ► Bribe paying to customs enhances imports, in particular when customs is inefficient. ► High waiting times at the border significantly reduce imports. ► Unpredictable corruption and policies have no robust effect.