1. When do anti-bribery laws affect international trade?
- Author
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Firth, John
- Subjects
- *
BRIBERY , *BUSINESS , *CORRUPTION , *POLITICAL corruption - Abstract
• I study whether trade is affected by laws against foreign bribery, passed under the OECD Anti-Bribery Convention (ABC). • ABC is poorly implemented at first, yielding no real effect on trade. • Shifting trade patterns in the early years of ABC are better explained by trends in international political cooperation. • When ABC enforcement intensifies under its Phase 3 initiative, it does start to affect trade patterns. • Effects are greatest in corruption-prone destination countries and sectors. This paper studies the relationship between anti-corruption enforcement and trade, offering a novel empirical perspective on the OECD Anti-Bribery Convention (ABC), in which signatory countries agreed to prosecute bribery of foreign officials. Existing literature on ABC focuses on its early years, claiming that it led OECD firms to avoid exporting to corrupt destinations, with the effect of diverting business away from developing countries. Yet these early years involved little actual enforcement, and I argue that the redirection of trade in this period owed not to the anti-bribery laws themselves, but to an underlying trend of increased political cooperation among OECD countries, as indicated by several factors including patterns in UN voting affinity. Only when enforcement of the laws intensifies, during the OECD's Phase 3 initiative, do the laws begin having real effects, diverting OECD countries' trade away from corrupt destinations. [ABSTRACT FROM AUTHOR]
- Published
- 2023
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