Do Countries Export Their Corruption? A Micro Analysis of Russia’s Trade Partners in Eastern Europe and Central Asia

This paper uses a probit and dprobit model to examine the domestic determinants of corruption in Eastern Europe and Central Asia. In addition, it also looks at whether economic links with a country that is perceived as corrupt—Russia—leads to an increase or decrease in the level of domestic corruption. Using a dataset at the firm level provided by the World Bank, this paper finds that the “Control Rights Hypothesis,” the “Bargaining Power Hypothesis”, and the “Grease the Wheels Hypothesis” are statistically significant at the domestic level and also shows that increased commerce links with Russia leads to a statistically significant correlation with the instance of corruption via the “Grease the Wheels Hypothesis” channel