Does Corruption Delay Trade Reform?

Abstract

It has been famously conjectured that in the presence of inefficient rules and regulations, corruption might grease the wheels of commerce and improve welfare. We provide evidence that in the case of international trade, corruption in fact contributes to the persistence of these restrictions. Our cross-country investigation of corruption and trade policy shows that tariff rates decreased less rapidly in more corrupt countries, implying that corruption is sand rather than grease in the wheels of commerce.