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Zagreb International Review of Economics & Business, Vol.12 No.2 November 2009. -

The paper empirically examines the relationship between trade openness and the level of corruption in Pakistan using annual time-series data for the period 1984 to 2007. The analysis shows that trade openness negatively affects corruption in Pakistan. The results are robust to controlling for other corruption determining variables and various model specifications. Sensitivity analysis shows that economic development and political liberalization reduce corruption levels. Other explanatory variables i.e. human and physical capital, government expenditures, population, inflation and defense expenditures significantly affect corruption in the expected directions.

openness; corruption; economic development; political institutions

Author: Muhammad Zakaria - ; Department of Economics, Quaid-i-Azam University, Islamabad, Pakistan



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