Does Corruption Deter Trade Openness in South Asia A Panel Regression Approach

Abstract

Under the context of South Asian nations, this research investigates the connection between unethical business practices manifested by corruption and openness to international commerce. Using panel data spanning the years 1960 through 2022, we explore whether or not corruption in eight South Asian nations (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka) has a impact on the openness of commerce. The results identify that corruption has a detrimental effect on the openness of commerce in South Asian countries. After controlling for other characteristics like economic growth, inflation, and political instability, we find that greater corruption levels are related to lower levels of trade openness. The result is robust to alternative panel specifications like pooled OLS, fixed-effects, random-effects, GMM, and PPML estimation techniques. The panel regression results have significant implications for policymakers in South Asian nations tasked with fostering economic growth and development in their countries via greater trade openness. It is possible that addressing