The Effect of Corruption on Exports and Imports in Latin America and the Caribbean

Abstract

ABSTRACT International trade, in particular exports and imports, are regarded as important factors that can increase the economic development of the Latin American and Caribbean (LAC) countries. However, little is known whether the ability of these countries to strengthen their global positions in trade can be affected by the pervasiveness of local corruption. The objective of this study is to analyze the impact of corruption on exports and imports in LAC countries. Our empirical results from the gravity model indicate that local corruption strongly reduces exports in the region. Thus, we conclude that LAC would be able to achieve more export growth if corruption in the region was effectively reduced.