Does Corruption Attenuate the Effect of Red Tape on Exports?

Ahsan, Reshad N.

doi:10.1111/ecin.12445

Cited by 10 publications

(2 citation statements)

References 33 publications

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“…This mechanism helps to explain the low trade elasticity documented among African countries. Similar findings are also documented by Ahsan (2016), who shows that corruption can attenuate the adverse effects of custom‐related red tapes on firm exports. Other researchers have documented more nuanced evidence.…”

Section: Introductionsupporting

confidence: 87%

Export as shelter from domestic corruption: Theory and evidence from developing countries

et al. 2021

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Corruption, in the form of bribery, extortion, embezzlement and clientelism, is prevalent among developing countries. It can be a tremendous cost for firms to do business, as evidenced by the strong negative correlation between corruption and the ease of doing business in a country (Figure 1). For an average firm in developing countries, the cost of corruption is expected to become more significant when it grows larger in size (Figure 2). How do firms get around the corruption barrier as they grow?A firm may incur corrupt practices at all stages, including registration, production and market sales. Although most research focuses on corruption at the registration or production stages, corruption related to market sales is also prevalent in practice. Examples include embezzlement during transport, corrupt court systems and local clientelism blocking firm entry. If corruption increases the cost of domestic sales and more so for firms that are larger in size, then exporting to foreign markets may become a more appealing option as they grow.To guide our study, we build a simple model to analyse the relationship between corruption and firms' exports. A firm decides on how to allocate its sales in domestic and foreign markets, taking into account the costs of corruption to access the domestic market. For simplicity, we assume it a bribe request (or extortion) that a firm needs to pay for domestic sales. When the expected cost for an official to extract bribes is fixed, the optimal strategy for the official is to target large firms and let go small firms. In response, large firms increase their exports and decrease their domestic sales to shelter Authors contribute equally to this paper.

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Section: Introductionsupporting

confidence: 87%

Export as shelter from domestic corruption: Theory and evidence from developing countries

et al. 2021

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“…In the first stage, firms interact with the bureaucrats in a bargaining power game to determine the bribe's equilibrium level. According to Emerson (2006), the probability of the detection of bribery by general authorities depends positively on the bribe's level and according to Ahsan (2017), the probability of the detection of bribery depends positively on the quality of institutions (x). Therefore, we define…”

Section: Theoretical Motivationmentioning

confidence: 99%

Bribery, on-the-job training, and firm performance

2022

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The previous literature has extensively examined the effect of firm-level bribery on firm performance but not through on-the-job training. This paper investigates the impact of paying bribes on the firm’s investment decisions in on-the-job training and offers mediating implications of corruption on firm performance. We empirically examine the relationship between bribery and on-the-job training using firm-level data from the World Bank Enterprise Surveys consisting of a sample of 94 developing countries with 20,601 firms. The findings show that bribery and on-the-job training intensity affects real annual sales growth rates negatively and positively, respectively. Furthermore, firms exposed to more bribery reduce their on-the-job training intensity. The results are robust to the different classifications of the firm’s size, different subsamples, and controls for the endogeneity of the on-the-job training and bribery.

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