Bribery and forced collection are two aspects of corruption, which is a type of moral authority abuse by public authorities. In the public sector, corruption’s effects, such as bribes and illegal taxes, are pervasive. The impact of crime on international trade is one complex investigation that is connected with various socio-economic fields. International trade is hampered by corruption, which affects both domestic and international trade in commodities and services.
The literature review contains the introduction, the main themes of the research topic, and a summary. It will observe the resources used in the study and identify the main themes of the survey and discuss weaknesses and future suggestions for the research. In order to achieve that, primary and secondary academic sources will be used for research purposes and data gathering. In the beginning, there will be a scope of the study and an explanation of the sources that will be covered. In the body part, there will be coverage and description of the sources that are used for the research. Each reference will be divided into groups that are united by the same topic.
There will be four topics in general with the corresponding sources. Finally, at the end of the paper will be a summary of the main points and an evaluation of the current state of literature in relation to the topic. In addition, there will be a coverage of flaws or gaps in existing knowledge along with ideas for future study. The purpose of the study is to evaluate the effect of corruption on international trade through credible resources and analysis of the contributing factors.
Correlation Between Corruption and Levels of International Trade
The first group of sources discusses the widespread impact of bribing on international trade. Shirazi confirms the connection between levels of corruption and business accessibility in this paper (2020). After establishing this connection, Shirazi compares the nations based on crime and the ease of doing business abroad and examination of the actual volumes of foreign commerce (2020). Based on the conclusions drawn from this comparison, it was feasible to identify the nations that stand to benefit the most from the fight against corruption and to estimate the potential effects on levels of global commerce.
In general, views of trade difficulties are substantially connected with perceptions of crime and corruption. Changes in tax laws, tax policies, and opinions on corruption among present or potential trading partners are more likely to cause fluctuations in the volume of international commerce for established markets (Shirazi, 2020). On the other hand, emerging and frontier economies are in competition with one another for international trade possibilities and have greater views of corruption. These marketplaces offer the best chance to pinpoint and analyze how corruption affects global commerce. From the perspective of how people perceive corruption, the following government services are vital: getting business permits, registering property, obtaining credit, enforcing contracts, and shutting down a business.
There is unquestionably a connection between the impression of corruption and global commerce. High-ranking nations, in terms of perceived corruption, are frequently seen as the most complex nations to do business with internationally (Shirazi, 2020). Agyei also argues that the misuse of public money in large-scale endeavors is facilitated by corruption, which prevents important social sectors from accessing these monies. The literature examined the origins, effects, and foundations of crime (Agyei, 2021). Additionally, Esteve-Pérez et al., in accordance with the most recent developments in the literature on gravity equations, reexamines the effects of corruption on global commerce while accounting for both intra- and inter-national flows (2021). Through careful consideration of legislation, and intercultural agreements and standards, Carr and Stone, provide a comprehensive understanding of the complexity of an international selling transaction (2017). In turn, Beverelli and colleagues suggest and use techniques to measure the influence of public institutions on global commerce and development (2018). They pinpoint, within the organizational gravity framework, the direct impact of national institutions on international trade.
The strategy naturally deals with the important problem of endogenous institutions. Strong evidence that more effective institutions encourage commerce is provided by the empirical analysis (Beverelli et al., 2018). Gezikol and Tunahan mainly focus on the process of the problem appearance (2018). The studies provide light on how corruption evolved historically into a financial issue and how foreign commerce and overseas investment have an impact on bribery. Thus, all the authors contribute to the understanding of the initial problem with bribing.
Positive and Negative Effects of Bribery
Some scholars argue that corruption might, in some situations, improve economic transactions, increasing efficiency. The argument is that bribery can aid businesses in avoiding legal and regulatory hurdles in economic models with numerous, complicated rules and weak institutions. In other words, corruption would act as a lever toward deregulation. Countries with low levels of institutional efficacy experience fewer negative effects from crime, while those with weak institutions experience positive outcomes.
Therefore, there are grounds to think that corruption’s actual results will depend on the circumstances in which they occur, although the bad effects often outweigh the favorable ones. Gil-Pareja et al. add that there are other components of the corruption phenomena that might affect how much it will impact global commerce (2019). These elements stem from the gravity of the behavior, the prevalence, the purpose, or the predictability of the behavior. Other authors have also highlighted a number of important considerations. Cooray et al. mention that the impact of corruption on the creation of trade relations has not been researched, despite the fact that its implications on bilateral commerce have been fairly thoroughly examined (2020). Depending on the features of the trade partners, a country’s corruption is able to induce asymmetrical costs on those partners. As a result, a nation’s trade flows from certain of its traders alter more than others changing the structure of its trade deals as the amount of corruption in that country varies. Ali and Gasmi (2017) also made a contribution to this topic through their research. According to the study, countries’ levels of corruption decline as their economies grow.
Additionally, estimate results based on per capita GDP imply that lower levels of corruption are related to both globalization and stronger governance. However, the findings provide strong evidence that bribery rises as overall price levels rise. The poor world is more affected by this than the industrialized world, where there may be higher rates of inflation and thus higher costs of living. The study highlights the impact of meaningful aspects such as inflation, GDP, and governance on the corruption level in international trade.
Anti-Corruption Methods and Suggestions
Several policy proposals have been made in light of a thorough examination of corruption in global business. Bahoo et al. claim that to reduce the detrimental impact of these variables on international investment, commerce, industry, and enterprises, robust international rules are first required (2020). Another major factor that plays an important role in international business is companies. Therefore, while developing organizational structures for businesses and creating methods to improve operational efficiency and performance, managers and policymakers need to take corruption into account. In order to combat crime in global trade, organizations must create organizational anti-corruption architectural systems (Bahoo et al., 2020). Finally, corruption casts doubt on a number of fundamental premises of current theories of management.
Some researchers made a weighty contribution to the studies by conducting a massive literature review. Enste and Heldman thoroughly analyzed the primary empirical literature over the past 20 years due to the data’s inconsistent nature (2017). They identified certain factors that influence the level of bribery, such as the size and framework of authorities, representative government and the system of government, the caliber of institutions, and economic liberty of the financial system (Holdman and Enste, 2017). Additionally, salaries of the public sector, press freedom, and judiciary, as well as cultural determinants, can have an influence on the amount of bribery in the country. Investment in general, foreign capital and capital inflows, international investment and support, official growth, inequality, public spending and services, the shadow economy, and crime are all impacted by corruption.
The anti-corruption treaties include practical restrictions, ideological biases, and the potential for unexpected effects, much like other international criminal laws. Ivory believes these characteristics make them useful tools in the struggle for animal welfare (2017). Additionally, they could conceal how initiatives to stop and deter animal trafficking are anthropocentric and cause human insecurity. The article by Villarino evaluates the chapter’s real worth by contrasting the conceivable outcomes with the effectiveness of current anti-corruption laws (2020). The intellectual discussion of corruption in global commerce and business is chronicled in the article by Kouznetsov et al. (2018). It recognizes three themes: preventing crime, dealing with its effects, and contributing elements. Kouznetsov et al. recognized a problematic gap in research that transcends, incorporates, or supports these interrelationships as a result (2018). Moreover, they discovered literary convergence and that authors frequently stick to their selected themes.
Additional Analysis of the Corruption
Two major additions to the literature are made by one specific study used in the research. The first contribution uses a complex gravity estimation approach to evaluate how corruption affects international commerce using intra- and inter-national trade flows. It enables determining the precise impact of country-specific degrees of bribery on global business. Epaphras and Massawe, by modeling the link between bribery and Foreign direct investment inflows using two indicators of corruption, namely the corruption index and control of crime, the article add to the body of knowledge (2017). Economic factors like inflation and the degree of openness are essential, but so are governance indicators like governance indicators, political stability and the act of war, government effectiveness, and the rule of law (Epaphra and Massawe, 2017). Both economic and governance quality indicators are taken into account in the analysis.
Kellenberg and Levinson add that every pair of nations’ commerce is recorded twice in official international trade statistics: once for the exporter and once for the importing country (2019). In theory, the only factor that separates the two values is the cost of transportation, but then as has long been understood, they also differ consistently in terms of tariffs at the product level. In this work, Xiao et al. creatively utilize transnational input-output analysis to determine a nation’s corruption footprint and display information on the items that use the most employment impacted by bribery as they move across countries (2018). Every nation’s corruption footprint comprises indigenous corruption and corruption brought in through international supply networks to fill market demand. Their findings indicate that developing nations are often the net exporters of crime, apart from Italy, where political and cultural variables are probably more likely to influence corruption than economic ones (Xiao et al., 2018). Clothing is the field corruption affects the most people, and China and India are the two countries that export the most crime on a gross basis.
Summary and Conclusion
High-ranking countries are generally regarded as the most corrupt in the world while conducting business. Corruption makes it easier for large-scale financial misappropriations of public funds and the relationship between degrees of corruption and commercial accessibility. Furthermore, even though its effects on bilateral commerce have been fairly fully analyzed, the influence of corruption on the development of commercial ties has not been studied. The study emphasizes important data and policy ramifications based on findings, particularly for underdeveloped countries. Strong international standards are first needed to reduce the negative effects of corruption on international investment, trade, industry, and businesses. Scholars must analyze and expand on these preexisting concepts while seeing corruption as a key problem in global commerce.
The current state of literature provides a broad spectrum of information to explore the influence of corruption in international trade and review the most crucial aspects. However, the existing knowledge lacks the pieces of advice or guidance for corruption prevention. Some sources claim that it can have both positive and negative influences on international trade, but there is little information on how to contribute to the development without bribing. For future study, it is useful to study more the specific business field that has a higher risk of corruption and study the causes and reasons for this. Moreover, in perspective identifying more suggestions for the elimination of crime is one of the potential topics.
Reference List
Agyei, R. (2021) Corruption and International Trade. The University of Pardubice Faculty of Economics and Administration Institute of Economics Sciences
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Bahoo, S., Alon, I., & Paltrinieri, A. (2020) ‘Corruption in international business: A review and research agenda’, International Business Review, 29(4), 101660.
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