Greed, Corruption, and the Modern State

Greed, Corruption, and the Modern State

Essays in Political Economy

Edited by Susan Rose-Ackerman and Paul Lagunes

What makes the control of corruption so difficult and contested? Drawing on the insights of political science, economics and law, the expert contributors to this book offer diverse perspectives. One group of chapters explores the nature of corruption in democracies and autocracies, and “reforms” that are mere facades. Other contributions examine corruption in infrastructure, tax collection, cross-border trade, and military procurement. Case studies from various regions – such as China, Peru, South Africa and New York City – anchor the analysis with real-world situations. The book pays particular attention to corruption involving international business and the domestic regulation of foreign bribery.

Chapter 8: Corruption and trade costs

Sandra Sequeira

Subjects: economics and finance, economic crime and corruption, law - academic, corruption and economic crime, politics and public policy, public policy


An established literature argues that reducing trade costs can substantially increase income and improve welfare in trading countries (Frankel and Romer 1999; Rodrik and Rodriguez 2000; Limao and Venables 2001; Obstfeld and Rogoff 2001). Although the standard approach to measuring trade costs focuses on tariff barriers, recent rounds of tariff liberalization led by the WTO have significantly reduced the impact of tariffs on the cost of trade. As a result, attention has shifted to other forms of non tariff barriers to trade such as the costs associated with the transport of goods across space (Anderson and Wincoop 2004; Donaldson forthcoming). Decades of substantial investments in road, rail and port infrastructure have not yet led to a substantial decline in transport costs, particularly in Sub Saharan Africa where these costs are highest. Hummels (2008) documents how high transport costs currently generate a higher effective rate of protection than tariffs in most of the developing world and Limao and Venables (2001) argue that the low quality of transport infrastructure accounts for an important part of the developing world’s poor trade performance. In 2011, shipping a container from a firm in the African sub continent was still almost twice as expensive as shipping it from India, and six times more time consuming than shipping it from the US (World Bank 2011).

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