Business Intelligence

Speed Money: Time Corruption And Trade

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Executive Summary

This paper shows that longer trade times are associated with higher levels of trade-related corruption, consistent with a theoretical framework in which "Fast" producers earn higher profits than "Slow" ones, but may have to pay "Speed money" to possibly corrupt customs officials. This finding is robust to the use of corruption measures based on perceptions and reported behavior, the inclusion of a wide range of control variables from the previous literature, and estimation using instrumental variables. Findings are consistent using a cross-country regression, firm-level regressions, and a gravity model of bilateral trade.

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