Date of Award

6-2009

Document Type

Union College Only

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Mehmet Sener

Second Advisor

Ellen Foster

Language

English

Keywords

corruption, economic, trade, development, analysis

Abstract

This thesis investigates the potential determinants of corruption using a cross-country empirical analysis. Economic growth literature has documented that corruption adversely affects investment and economic development. Thus, it is important to understand its root causes. I conduct an empirical analysis to test the determinants of corruption using legal, cultural, and other factors. My analysis departs from the literature on two accounts. First, I use a new, more objective measure of corruption, namely diplomatic parking violations in New York City, as compiled by Fisman and Miguel (2007). This approach differs from previous studies which have used subjective survey-based indices based on perceived corruption. Second, I account for the endogeneity of trade and economic development by using instruments from the growth literature. To instrument for trade, I use constructed trade shares which measure countries’ propensity to trade based on geographical factors. To instrument for economic development, I use European settler mortality rates in the colonialization era. I find that countries that have a larger Protestant population and are more open to trade have low levels of corruption while countries with higher share of natural resource exports have higher levels of corruption. Also, economic development has a small, negative effect on the level of corruption.

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