DOES CORRUPTION ATTENUATE THE EFFECT OF RED TAPE ON EXPORTS?

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).