Corruption and trade costs

Abstract

How corruption affects firm-level trade costs remains an important though relatively unexplored line of inquiry in the trade literature. Corruption can increase trade costs if it represents an additional tax firms have to pay to clear goods across borders, or it can decrease trade costs if it allows firms to circumvent cumbersome bureaucratic procedures or reduce clearing times. This chapter discusses novel evidence from corruption patterns in two ports in Southern Africa, to shed light on the determinants and on the implications for international trade of corruption in transport networks.