Who is Hurt By Corruption in the United States?

brown-envelope-money-bribe-1-1384589-mWhat is the economic impact of corruption? And who is hurt most by these misguided acts? Author Adriana S. Cordis discusses this topic in her article “Corruption and Composition of Public Spending in the United States” from Public Finance Review.

The abstract:

I investigate the relation between corruption and the composition of state government spending in the United States. The analysis reveals that the United States is not immune to the adverse effects of corruption documented in cross-country studies. Corruption lowers the share of state governmentPFR_72ppiRGB_powerpoint spending devoted to higher education and raises the share of spending devoted to other and unallocable budget items. These results are robust to the use of political variables to instrument for corruption. There is also some evidence that corruption lowers the share of spending on corrections and public welfare and raises the share of spending on health and hospitals, housing and community development, and natural resources.

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Fishing for NTBs

William R. Schubert, Loyola University Chicago School of Law, published “Fishing for NTBs: The Catfish Wars as a Rent-Seeking Problem” on December 5th, 2011 in the Journal of Macromarketing. To view other OnlineFirst articles, please click here. Mr. Schubert has kindly provided the following responses to his article.

Who is the target audience for this article?

The article primarily targets exporters (particularly those with business in the U.S.) that want to limit the risk of incurring unnecessary losses resulting from low-visibility non-tariff barriers (NTBs) or so-called “disguised protectionism.”

Of course, the broader target audience includes anyone interested in the topic – likely, people in academia.

What inspired you to be interested in this topic?

I have been interested in international economic relations for years. I re-discovered that interest within the context of the legal profession.  I have experience in competition law (antitrust) and I have become particularly interested in how the antitrust laws clash with the so-called unfair trade laws in terms of their underlying purposes, and in the results that they create.  (This topic – while not directly implicated in this paper – is very interesting from an American perspective, since  the U.S. antitrust laws have a uniquely strong global presence in terms of their international application and reach).

My selection of the Vietnamese industry for the case study resulted from a specific course I took at Loyola University Chicago, which focused on Vietnam.

Were there findings that were surprising to you?

Yes.  It was surprising to me how overwhelming of a role protectionism played in both the black letter law and in the specific facts implicated in the “Catfish Wars” case study. (The problem with this is not that it is protectionist, but that the protectionism is “disguised” beneath supposedly neutral laws that affect trade). I think that most people, in spite of any ideologies they might hold regarding trade policy, would be surprised upon learning what I learned.

How Do You See This Study Influencing Future Research And/Or Practice?

I will continue to develop my academic and professional ambitions in competition and trade regulation.

How does this study fit into your body of work/line of research?

I have been exposed to competition law and policy (antitrust) since around 2005. My interest in international trade extended from that background.

How did your paper change during the review process?

It became increasingly more tailored to the viewpoint of export industries; I tried to outline what export industries can do pragmatically to weaken the potential problem of disguised protectionism. This came in light of the realization that disguised protectionism – a problem without an agreed-upon definition – has proven difficult to control via trade policy. In fact, many trade rules arguably add to the problem. (Notably, a good deal of research on globalization supports the notion that wealthier economies tend to take advantage of trade laws, often at the expense of developing economies.  This theme was certainly implicated in the “Catfish Wars” case study.  Given this practical difficulty, I thought it would be helpful to focus on what export industries in growing economies can do on their own, in lieu of an all-encompassing policy solution.  It also worked nicely with the macromarketing theme of the journal; after all, this is not a law journal piece.)

What, if anything, would you do differently if you could go back and do this study again?

Unfortunately, the case study is still a moving target. I suppose I would have liked to know with certainty how all of the relevant events would unfold in the future.

Also, I suspect that a functionalist-type argument could be advanced to support the position that so-called “disguised” protectionism is not necessarily as economically wasteful as would seem based on what is written in the article.  I am only an attorney, and my training in economics is somewhat limited; perhaps I missed a few key points along these lines in the article.  I would absolutely appreciate any feedback on this topic from those who read the article (particularly, those with a more-advanced economics background).

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