does corruption cause encumbered business regulations an iv approach in this research we attempt to understand the effects of corruption on business regulations measured by number of procedures time and costs involved in satisfying governmental requisites using two stage least squares 2sls methods we lessen the problems associated with endogeneity and uncovered the existence of a robust positive statistically significant and quantitatively large direction channel from corruption to encumbered business regulations these results suggest the need to deter corruption in order to improve business regulations the quest to reduce corruption worldwide acquires new relevancy given the findings of djankov et al 2006 that countries with simple and transparent regulations grow faster

are corruption and taxation really harmful to growth firm level evidence exploiting a unique data set containing information about the estimated bribe payments of ugandan firms the authors study the relationship between bribe payments taxes and firm growth in uganda for the period 1995 97 using industry location averages to circumvent the potential problem of endogeneity and to deal with issues of measurement error they find that both the rate of taxation and the rate of bribery are negatively correlated with firm growth for the full data set a one percentage point increase in the bribery rate is associated with three percentage point reduction in firm growth an effect about three times that of taxation moreover after excluding outliers the authors find that bribery has a much greater negative impact on growth and taxation a considerably smaller one this provides some validation of firm level theories of corruption which posit that corruption retards development even more than taxation does

corruption investments and contributions to public goods experimental evidence from rural liberia we analyze how corruption affects incentives to invest or contribute to public goods we obtain a proxy for corruption among liberian community leaders by keeping track of a flow of inputs associated with a development intervention measuring these inputs before and after giving them in custody to the chief we then use the gap between these measurements missing inputs to explain variation in investment behavior of villagers investment behavior is gauged with two simple artefactual field experiments our main results are that corruption i undermines incentives for voluntary contributions to local public goods and ii may reduce private investments of individuals subject to rent seeking by the chief in real life we also provide weaker evidence that the impact of corruption on investments and contributions to public goods is heterogeneous this impact may be gender specific and appears to vary with accessibility of communities

corruption manufacturing plant growth and the asian paradox indonesian evidence summary using panel data from the indonesian manufacturing industry during the suharto era 1975 95 we assess the impact of plant level corruption on output and productivity growth in support of the grease the wheels hypothesis and the view of an asian paradox we find that corruption measured as bribes and indirect tax payments has a positive and statistically significant effect on individual plant growth this effect persists over the entire period which suggests improvements in the efficacy of the bribe system and a strengthening of the long term contract between firms and the government

how business is done in the developing world deals versus rules what happens in the developing world when stringent regulations characterizing the investment climate meet weak government willingness or capability to enforce those regulations how is business actually done the doing business project surveys experts concerning the legally required time and costs of regulatory compliance for various aspects of private enterprise starting a firm dealing with construction permits trading across borders paying taxes getting credit enforcing contracts and so on around the world the world bank s firm level enterprise surveys around the world ask managers at a wide array of firms about their business including questions about how long it took to go through various processes like obtaining an operating license or a construction permit or bringing in imports this paper compares the results of three broadly comparable indicators from the doing business and enterprise surveys overall we find that the estimate of legally required time for firms to complete a certain legal and regulatory process provided by the doing business survey does not summarize even modestly well the experience of firms as reported by the enterprise surveys when strict de jure regulation and high rates of taxation meet weak governmental capabilities for implementation and enforcement we argue that researchers and policymakers should stop thinking about regulations as creating rules to be followed but rather as creating a space in which deals of various kinds are possible

where does microfinance flourish microfinance institution performance in macroeconomic context abstract we study whether and how the success of microfinance institutions mfi s depends on the country level context in particular macroeconomic and macro institutional features understanding these linkages can make mfi evaluation more accurate and further can help to locate microfinance in the broader picture of economic development we collect data on 373 mfis and merge it with country level economic and institutional data evidence arises for complementarity between mfi performance and the broader economy for example mfis are more likely to cover costs when growth is stronger and mfis in financially deeper economies have lower default and operating costs and charge lower interest rates there is also evidence suggestive of substitutability or rivalry for example more manufacturing and higher workforce participation are associated with slower growth in mfi outreach overall the country context appears to be an important determinant of mfi performance mfi performance should be handicapped for the environment in which it was achieved

corruption and firm behavior evidence from african ports this paper investigates how corruption affects firm behavior using an original and unusually rich dataset on bribe payments at ports matched to firm level data we observe how firms adapt to different types of corruption by adjusting their transport strategies our results suggest that firms respond to the price effects of corruption organizing production in a way that increases or decreases demand for the public service

energy consumption and the influencing factors in china a nonlinear perspective abstract different from many studies on energy kuznets curve this paper does not directly consider income factor but conducts a nonlinear study on per capita primary energy consumption and electricity consumption in china whose economic development is considered investment driven in which government macroeconomic policies especially government expenditure plays a very important role in particular this paper attempts to compare the different impacts of government expenditures and the other influencing factors on energy consumption based on the results of the threshold regression in the future with the further development of the economy the driving force of labor population growth will slow down comparing with primary energy the relationship between electricity consumption and its influencing factors will change later and the difference in the effects of the influencing factors is mainly reflected in the formation of capital stock investment and the development of urbanization government expenditure on private goods may not be always as inefficient in energy consumption and cleaner production as previously thought in the literature meanwhile the growth of government expenditure on public goods will become a powerful driving factor which indicates that the government needs to assess its overall impact on energy consumption and energy efficiency when participating in the provision of public goods the paper also found that when studying the issue of energy consumption and regional differences in china the geographic classification of eastern central and western regions may not be appropriate grouping according to energy consumption levels may be one of the better options and the distribution of energy consumption levels in china s provinces is consistent with the distribution of government expenditure levels the estimation results also provide us with important policy implications the government expenditure in education is of great importance and it can produce a strong energy saving effect through technological progress

firm level corruption in vietnam abstractthis article uses panel data from a survey of small and medium sized enterprises in vietnam to uncover which firms pay bribes and which do not we also study how bribe paying evolved between 2005 and 2007 and test how the determinants of bribes changed between the two years three sets of insights emerge first bribe incidence is highly associated with firm level differences in visibility sunk costs ability to pay and some but not all types of interaction with public officials second the magnitudes of bribes are distinctly higher for firms which get preferential tax benefits and government contracts third the observed decrease in bribe incidence between 2005 and 2007 is largely driven by significant behavioral changes these behavioral changes seem to be associated with policy initiatives to improve law enforcement and increased media focus on punitive actions against corruption

does competition kill corruption corrupt agents officials or gangsters exact money from firms corruption affects the number of firms in a free entry equilibrium the degree of deep competition in the economy increases with lower overhead costs relative to profits and with a tendency toward similar cost structures increases in competition may not lower corruption the model explains why a rational corrupt agent may extinguish the source of his bribe income by causing a firm to exit assessing the welfare effect of corruption is complicated by the fact that exit caused by corruption does not necessarily reduce social welfare

an equilibrium queuing model of bribery it is sometimes argued that bribery is inefficient because bureaucrats may cause delays for attracting more bribes this hypothesis is examined in the context of a queue where customers having different values of time are ranked by their bribe payments to the queue s server the nash equilibrium strategies of the customers are derived it is shown that the server is unlikely to slow down the allocation process when bribery is allowed the model does not have stringent informational requirements and the equilibrium outcome minimizes the average value of time costs of the queue it also suggests a useful auctioning procedure

corporate tax effects on the quality and quantity of fdi this paper measures the relative importance of quality and quantity effects of corporate taxation on foreign direct investment quantity is affected if corporate taxes reduce the equilibrium stock of foreign capital in a given country quality effects arise if taxes decrease the extent to which investment contributes to the corporate tax base and the capital intensity of production depending on the sign of the quality effects the detrimental welfare effects of corporate taxation are either mitigated or aggravated we derive a number of hypotheses how corporate tax changes may affect the quality of investment our hypotheses are then tested using data from a large sample of european multinationals with regard to corporate tax effects on the corporate tax base we find that quality effects account for up to fourty per cent of the total effect with regard to corporate tax effects on labour income our results suggest that quality effects mitigate the negative quantity effect by nearly sixty percent as corporate taxes strongly increase the labor intensity of production an important implication is that governments should not exclusively care about the size of inbound fdi flows but also about their specific characteristics i e their quality

does firm growth increase corruption evidence from an instrumental variable approach prior literature on the role that firm heterogeneity plays in corruption finds that larger firms pay smaller bribes and are less likely to pay bribes than smaller firms these studies however often overlook the plausible reverse causality between firm growth or firm size and corruption utilizing an innovative identification strategy that accounts for this source of endogeneity this study finds that increased firm size actually causes greater corruption and bureaucratic burdens on a typical firm and provides evidence against the argument for a uniform corruption burden regardless of size it was determined that a one standard deviation increase in sales leads to 0 33 standard deviation increase in bribes and to 0 36 standard deviation increase in management time spent dealing with public officials moreover although corruption burden increases with increasing firm size we find that this relationship is non linear and diminishes in magnitude as firm size approaches to medium and large we conclude with implications and policy considerations

does demand for product quality increase worker training abstract we uniquely examine the relationship between firm organized training and the sensitivity of consumer demand to product quality cross section panel fixed effect and instrumental variable estimates confirm that british workplaces provide more intensive training when their product demand is more sensitive to product quality robustness checks including using alternative key variable definitions and a counterfactual analysis examining the importance of competing on price support this confirmation

the labor market return to academic fraud abstract academic fraud by undergraduate students is pervasive but should it be taken seriously as an economic problem our research suggests so using a unique data set from the caucasus we estimate a large positive effect of academic fraud on the probability of employment econometrically we deal with endogenous selection into academic fraud and possible measurement error in the reporting of academic fraud using partial identification techniques the findings demonstrate that incentives to commit academic fraud are strong and point towards the potentially damaging consequences of academic fraud in broader settings

firm productivity innovation and financial development acknowledgment we are grateful to christopher kilby saul lizondo chris papageorgiou the strategy policy and review departments low income countries group the africa department s macro modeling debt and growth network and two anonymous referees for useful comments and suggestions kersting gratefully acknowledges financial support by the center for global leadership at the villanova school of business 1 introductioneconomists still struggle to explain the large differences in output per worker across countries the view that these differences are mostly the result of variations in investment rates has now largely been abandoned as cross country evidence suggests that total factor productivity tfp rather than capital accumulation accounts for observed per capita income differences hall and jones 1999 the largely unexplained cross country differences in tfp led to prescott s 1998 call for a theory of tfp in response barriers to innovation imitation and adoption e g parente and prescott 2000 and institutions e g acemoglu and johnson 2005 have often been offered as explanations for low tfp in poorer countries the global crisis and the resulting uncertainty have reinforced concerns about growth prospects in many low income countries after a decade of almost universally solid growth performance the medium term outlook for many low income countries appears increasingly uncertain at the same time the growth potential in many countries with low tfp remains dim even beyond the full conclusion of this crisis if tfp drives growth its determinants are the key to development prospects in low income countries some country specific direct determinants of tfp geography history or institutions such as the prevalent legal system are fixed or slow moving and the degree to which policy can influence these conditions is limited others such as innovation or the level of financial development can respond to both foreign and domestic forces external shocks globalization or government policy in this view tfp is not primarily the result of the endowment of a country but instead a direct result of purposeful actions by economic agents and as such can be influenced by policy innovation activity leads to technological progress in two distinct ways purposeful research and development can result in the invention of completely new products and processes this kind of innovative activity moves the global technological frontier and still mainly occurs in developed countries however innovation also consists of the adoption and adaptation of existing technology which can close the gap between countries converging toward the global technological frontier and those on the leading edge pushing the world frontier innovation shares a strong connection with the provision of financial services invention and adoption of technology are costly and risky activities which require financing it is therefore natural to study the impact of a country s financial development on tfp via the innovation channel 1in this article we follow that agenda in two separate steps i how do firm specific actions in particular innovation affect firm productivity ii what is the role of a country s level of development both financial and general in facilitating higher productivity using firm level data taken from the enterprise surveys covering over 14 000 firms in 63 countries we first establish a connection between a firm s innovative activities and its productivity we control for country industry and firm specific factors the countries in our data include low middle and high income countries while the firms span all sizes with a focus on small and medium sized enterprises sme innovation is defined broadly as the introduction of new production processes or product lines so that it includes the adaptation of existing technology we find that other things being equal firms that have introduced a new process or product are more productive

are foreign owned firms more likely to pay bribes than domestic ones evidence from emerging markets summary an extensive literature exists on the adverse effects of corruption on inward fdi and the impact this may have on economic development but the reverse causality has not been fully explored legislation in the us and the eu prohibits firms from engaging in corrupt practices in foreign countries and this suggests that foreign owned firms might be less likely to pay bribes however such legislation may be ineffective because foreign firms have to adapt to local market conditions or risk being uncompetitive using firm level data for 41 emerging countries a probit model estimates the probability that a firm pays bribes to allow for possible endogeneity this probit analysis is repeated with an instrument to proxy for endogenous foreign ownership then a propensity score matching technique tests for differences in the propensity to pay bribes by domestic and foreign firms the paper finds no difference in the behavior of foreign owned and domestic firms with respect to corrupt practices results are robust to different levels of foreign ownership and support the view that foreign owned firms adapt to local practices and are neither more nor less likely to pay bribes than comparable domestic firms the paper finds that other variables including bureaucracy government contracts and perceived difficulties with civil society legal and political do have statistically significant effects on increasing bribery and that some others such as per capita gdp tend to reduce bribery the study concludes that there is no evidence that foreign ownership after investment has occurred tends to reduce bribery but it does support the view that foreign owned firms adopt local behavioral norms

does delegation increase worker training we model a principal firm offering training to its agent worker under two alternative organizational structures integration where the principal retains authority to overrule the investment project recommended by the worker and delegation where the principal cannot overrule the worker s preferred investment project we assume that training reduces the worker s effort cost of assembling information about alternative projects payoffs and identify the conditions under which delegation increases the profit maximizing intensity of training empirical estimates from matched employer employee data show that workplaces delegating authority do provide more worker training this result persists in two cross sections in panel fixed effect estimates and critically in an instrumental variable exercise that also controls for establishment fixed effects jel d21 d22 d23 m53 m54

corruption and destructive entrepreneurship the negative effects of corruption at the macro level are well documented corruption reduces economic growth lowers investment and erodes trust in government officials creating an institutional environment that pushes entrepreneurs from productive to destructive activities corruption also has effects at the micro level because some industries are better situated to profit from corruption than others corruption not only lowers economic output but also shifts resources toward some industries and away from others using federal convictions in the usa as a measure of corruption regression results show that increased corruption shifts resources toward the construction industry and away from the education industry and professional scientific and technical service industry the evidence also shows that the distance from state capitals and voter turnout moderate the relationship between corruption and firm concentrations

officials versus thieves is public or private expropriation more harmful to small firms abstractcorruption and crime are factors that regularly affect firms yet few papers compare the two impacts this is largely due to a lack of data something i overcome using recent surveys of microenterprises in mexico after instrumenting for individual firm level incidence i find that thieves are much more harmful to microenterprises than officials the incidence of robbery and extortion is associated with declines in income and employees while the incidence of bribery and fines are associated with increases in both this highlights that crime can be a larger deterrent to firm growth than corruption in certain environments

the effects of external knowledge search and ceo tenure on product innovation evidence from chinese firms this article examined the effects of knowledge search breadth and ceo tenure on success in product innovation building on knowledge search literature and attention based theory the study posited that the breadth of a firm s external knowledge search has a curvilinear effect on its product innovation success it further proposed competing predictions about the moderating role of ceo tenure in the relationship data on a sample of 1262 chinese firms across multiple industries provided robust support for the bell shaped effect of external search breadth longer ceo tenure was shown to strengthen the relationship such that firms led by long serving ceos gained more innovation benefits from broad technology search than those led by new ceos copyright 2014 the author 2013 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

fractionalization entrepreneurship and the institutional environment for entrepreneurship the vast majority of the literature on ethnicity and entrepreneurship focuses on the construct of ethnic entrepreneurship however very little is known about how ethnic heterogeneity affects entrepreneurship and the institutional arrangements affecting entrepreneurship this study attempts to fill the gap and thus examines the effect of ethnic heterogeneity on various outcomes associated with entrepreneurship and the institutional environment for entrepreneurship using indices of ethnic and linguistic fractionalization we show that ethnic heterogeneity negatively influences entrepreneurship we argue that potential channels that can explain the negative effect of fractionalization on entrepreneurship include trust social network and innovation among others this study provides a new perspective on the existing debate that seeks to understand why the levels of entrepreneurial success vary across countries

is more competition always better an experimental study of extortionary corruption using a laboratory experiment we assess whether increasing competition among public officials reduces extortionary corruption we find that increasing the number of providers has no effect on bribe demands when citizens search costs are high but it increases corruption when search costs are low the effect is absent in a parallel setting framed as a standard market which we attribute to citizens using a nonsequential search strategy as opposed to sequential search in the corruption setting we conclude that efforts to reduce search costs such as infrastructure investments are preferable to anti corruption policies aimed at increasing the number of providers jel d73 d49 c91

financial incentives in health new evidence from india s janani suraksha yojana this paper studies the health effects of one of the world s largest demand side financial incentive programmes india s janani suraksha yojana our difference in difference estimates exploit heterogeneity in the implementation of the financial incentive programme across districts we find that cash incentives to women were associated with increased uptake of maternity services but there is no strong evidence that the jsy was associated with a reduction in neonatal or early neonatal mortality the positive effects on utilisation are larger for less educated and poorer women and in places where the cash payment was most generous we also find evidence of unintended consequences the financial incentive programme was associated with a substitution away from private health providers an increase in breastfeeding and more pregnancies these findings demonstrate the potential for financial incentives to have unanticipated effects that may in the case of fertility undermine the programme s own objective of reducing mortality

the devil is in the details the successes and limitations of bureaucratic reform in india abstract using a biometric technology to monitor the attendance of public health workers in india resulted in a 15 percent increase in staff presence particularly for lower level staff the monitoring program led to a reduction in low birth weight babies highlighting the importance of improving provider presence but despite the government initiating this reform there was ultimately a low demand by the government to use the higher quality attendance data available in real time to enforce their existing human resource policies e g leave or salary deductions due to logistical challenges and a not unrealistic fear of generating staff discord or increase in staff attrition especially among doctors who showed the least improvement in attendance while we observed some gains from this type of monitoring program technological solutions by themselves will not improve attendance of government staff without a willingness to use the data generated to enforce existing penalties

deforestation and seigniorage in developing countries a tradeoff abstract most of countries covered by natural forests are developing countries with limited ability to levy taxes and restrained access to international credit markets consequently they are amenable to draw heavily on two sources of government financing namely seigniorage and deforestation revenues first we develop a theoretical model emphasizing a substitution effect between seigniorage and deforestation revenues second a panel data econometric analysis over the 1990 2010 period confirms our findings consequently a tighter monetary policy hastens deforestation third we extend the theoretical model and show that international transfers dedicated to forest protection can upturn the positive link between tighter monetary policies and deforestation and then discuss the relevance of this finding with respect to recent institutional arrangements

does corruption boost or harm firms performance in developing and emerging economies a firm level study in the last decade a growing number of studies have addressed the ongoing debate about whether corruption sands or greases the wheels of business at the firm level this study revisits this debate and proposes a comprehensive theoretical framework to test whether corruption harms or boosts firm performance as well as the extent to which this relationship is mediated by the countries institutional settings the size and strategic behaviour of the firms and market competition based on a sample of 21 250 firms located in 117 emerging and developing countries and resorting to instrumental variable iv estimations three main results were found a regardless of the proxy used for corruption and firm performance the former clearly harms the latter b corruption greases the wheels of business for african firms but it sands the wheels for firms in latin america the caribbean eastern europe central asia and southern asia and c the negative impact of corruption on performance is mitigated for larger and exporting firms

how petty is petty corruption evidence from firm surveys in africa summary evidence suggests that corruption is costly for african firms this paper however shows that a minor difference in the way the question on bribe payments is asked has a large effect on estimates of the size of the burden on average firms report payments that are between 4 and 15 times higher when they report them as a percent of sales than when they report them in monetary terms the paper discusses several possible reasons for this but none explain the difference one plausible remaining reason is that firm managers overestimate bribes when they report them in percentage terms

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

is corruption really bad for inequality evidence from latin america this article presents new evidence on the relationship between corruption and income inequality using a panel data methodology we find that lower corruption is associated with higher income inequality in latin america this result is in contrast to other empirical studies but it makes sense in latin america for a number of reasons the finding of an inverse relationship between inequality and corruption suggests that institutional reform policies by themselves may be misguided

environmental keynesian macroeconomics some further discussion abstract this paper extends the is lm ee framework first formulated by heyes heyes a 2000 a proposal for the greening of textbook macro is lm ee ecol econ 32 1 7 in his model exogenous fiscal or monetary shocks are needed so that the intersection of all three schedules is reached such independent adjustments are circumvented in this paper which argues that a naturally adjusting process exists and formalizes this mechanism for the is lm ee framework

corruption product complexity and african exporters abstractseveral studies have shown that african manufacturers perform poorly especially in comparison to their counterparts from other developing countries we build on these studies by a examining the decision to stop exporting among african manufacturers and b investigating whether these decisions can be linked to institutional dimensions such as corruption consistent with previous studies we observe that a significant fraction of african firms stop exporting every year using product complexity as a measure of an industry s sensitivity to corruption we find that firms in more corruption sensitive industries are more likely to stop exporting if there is an increase in overall corruption in the exporting country firm characteristics such as size and productivity also seem to influence the decision to stop exporting our finding about the relationship between corruption and the decision to stop exporting supports the conventional wisdom that corruption is detrimental to economic performance

the impact of regulatory quality and corruption on residential electricity prices in the context of electricity market reforms abstract the european electricity markets have been undergoing significant regulatory reforms since the introduction of the first liberalisation directive in 1996 theory predicts that liberalisation promotes cost efficient production and competition and hence leads to lower prices the goal of this paper is to assess the impact of regulatory quality and non compliance with the law on electricity prices in the context of electricity market reforms we address problems of endogeneity by using the blundell blond system gmm estimator and find that vertical integration and market concentration lower end user prices all else equal moreover improving regulatory quality and reducing corruption both have a negative impact on prices when holding other factors constant the intensity of the reforms has limited impact on electricity prices when these reforms are introduced in an institutional environment characterised by high levels of corruption and low quality regulation

sri lanka s rural non farm economy removing constraints to pro poor growth summary we use a survey of rural enterprises from sri lanka to explore characteristics of the informal non farm sector and identify obstacles to its expansion and productivity value added in this sector amounts to 80 of agricultural gdp participating households incomes are significantly higher than those of households who do not participate barriers to entry are low and the impact of non farm development on inequality modest implying a large potential contribution to growth and poverty reduction infrastructure constraints negatively affect new startups investment in and productivity of existing enterprises with small enterprises being particularly affected

north south interactions in the presence of trade in environmental permits a structuralist investigation this article develops a structuralist framework to analyse a world where production requires emission permits international agreements bind northern output whilst leaving room for the south under the principle of common but differentiated responsibilities act i considers the effects of reducing northern output through tighter emission regulations in the short run traditional structuralist results such as a negative effect on southern terms of trade and accumulation follow in the long run the impact of northern regulation is bottled up within that region this latter property vanishes once act ii allows for the creation of international permit markets permit trade relaxes the northern output constraint whilst also establishing a channel through which the north directly influences southern permit prices the result in the short run is to reverse the effects of tighter northern regulation on relative southern terms of trade and accumulation which now increase in the long run international permit trade leads to increased variability in the 1 global distribution of capital in response to tighter northern regulation and 2 intensity of northern emissions in response to tighter southern regulation thus globalised permit exchanges generate new trade offs between the global distribution of capital and environmental efficiency

firm networking and bribery in china assessing some potential negative consequences of firm openness economic openness both in terms of increased international trade exposure and enhanced inter firm networking has been a key element of china s economic emergence since the implementation of market reforms and the opening up policy over 30 years ago unfortunately these changes have also coincided with the increased incidence of bribery and corruption both in general and in the specific context of china research on the relationship between a firm s tendency toward openness and its propensity to engage in bribery is scarce this study seeks to fill this gap based on empirical evidence provided by a large sample of chinese firms the findings of the study reveal that firms increased networking and openness tend to occur contemporaneously with greater bribery and corruption we suggest that this may be due to the misuse of guanxi based networks that coincide with the presence of firms open network strategies heightened by the potential loss of resource and capability heterogeneity and hence reduced competitive advantages in the context of openness we further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development

corruption institutions and economic development many scholarly articles on corruption give the impression that the world is populated by two types of people the sanders and the greasers the sanders believe that corruption is an obstacle to de velopment while the greasers believe that corruption can in some cases foster development this paper takes a critical look at these positions it concludes that the evidence supporting the greasing the wheels hypothesis is very weak and shows that there is no cor relation between a new measure of managers actual experience with corruption and gdp growth instead the paper uncovers a strong negative correlation between growth in genuine wealth per capita a direct measure of sustainable development and corruption while corruption may have little average eect on the growth rate of gdp per capita it is a likely source of unsustainable development

the effect of government expenditure on the environment an empirical investigation abstract this paper examines the impact of government spending on the environment using a panel of 77 countries for the time period 1980 2000 we estimate both the direct and indirect effects of government spending on pollution the indirect effect in particular operates through the impact of government spending on income and the subsequent effect of the income level on pollution to take into account the dynamic nature and the potential endogeneity in the relationships examined appropriate econometric methods are used for so2 government spending is estimated to have a negative direct impact on per capita emissions while the direct effect is insignificant on co2 pollution the indirect effect on so2 is negative for low income levels and becomes positive as income increases while it remains negative for co2 for the most part of the sample range the resultant total effects follow the patterns of the indirect effects which dominate their respective direct ones for each pollutant policy implications from the results vary depending on the income level of the considered countries

the mortality cost of political connections we study the relationship between the political connections of chinese firms and workplace fatalities in our preferred specification we find that the worker death rate for connected companies is two to three times that of unconnected firms depending on the sample employed a pattern that holds for within firm estimations the connections mortality relationship is attenuated in provinces where safety regulators promotion is contingent on meeting safety targets in the absence of fatalities connected firms receive fewer reports of major violations for safety compliance whereas in years of fatal accidents the rate of reported violations is identical moreover fatal accidents produce negative returns at connected companies and are associated with the subsequent departure of well connected executives these results provide suggestive evidence that connections enable firms to avoid potentially costly compliance measures rather than using connections to avoid regulatory response after accidents occur our findings emphasize the social costs of political connections and suggest that appropriate regulatory incentives may be useful in mitigating these costs

a theory of misgovernance this paper tries to explain why government bureaucracies are often associated with red tape corruption and lack of incentives the paper identifies two specific ingredients that together can provide an explanation the fact that governments often act precisely in situations where markets fail and the presence of agency problems within the government we show that these problems are exacerbated at low levels of development and in bureaucracies dealing with poor people we also argue that we need to posit the existence of a welfare oriented constituency within the government in order to explain red tape and corruption

the effect of informal networks on corruption in education evidence from the household survey data in bangladesh abstract using the 2007 household survey data collected by transparency international bangladesh we examine corruption in the education sector in bangladesh our main findings are i the incidence of corruption and the amount of bribe increase with the level of red tape ii poorer households households with a less educated household head and households with girls studying in school are more likely to be victims of corruption iii households with higher social status are more likely to use informal networks to bypass the red tape or pay less amount of a bribe and as a result iv corruption is likely to be regressive

economic regulations red tape and bureaucratic corruption in post communist economies summary should state regulatory involvement in the economy necessarily generate corruption while excessive regulatory burden is often treated as a cause of corruption this paper argues otherwise it distinguishes regulatory policy or de jure regulatory regimes from regulatory implementation and offers a more nuanced argument about the relationship between state regulations and bureaucratic corruption the analysis of business survey data covering 25 post communist economies demonstrates that mechanisms of regulatory implementation rather than heavy handed regulatory policy are responsible for bribery this analysis draws attention to the theoretical distinction between different types of regulatory hurdles and their differential effects on the quality of governance

the impact of corruption on consumer markets evidence from the allocation of second generation wireless spectrum in india abstracttheoretical predictions of the impact of corruption on economic efficiency are ambiguous with models allowing for positive negative or neutral effects while much evidence exists on levels of corruption less is available on its impact particularly its impacts on consumer markets this paper investigates empirically the effect of the corrupt sale of spectrum licenses to ineligible firms on the wireless telecommunications market in india i find that the corrupt allocation had at worst no impact on the number of subscribers prices usage revenues competition and measures of quality i argue that the market based transfer of licenses to competent firms other than the original awardees combined with fierce competition in the telecommunications sector may have mitigated potential deleterious impacts of corruption on consumers these results suggest that the original corrupt allocation did not matter which provides support for the coase theorem

clean or dirty energy evidence of corruption in the renewable energy sector this paper studies the link between public policy and corruption for the case of wind energy we show that publicly subsidized renewable energy can attract criminal appetites and favor the formation of criminal associations between entrepreneurs and politicians able to influence the licensing process the insights of a simple model of political influence by interest groups are tested empirically using italian data for the years 1990 2007 using a difference in difference approach we quantify the impact of a green certificate policy aimed at supporting renewables and find robust evidence that criminal association activity increased more in windy provinces after the introduction of the generous policy regime the magnitude of the effect is large the construction of an average wind park is associated with an increase in criminal activity of 6 in the treatment compared to the control group our findings show that in the presence of poor institutions even well designed market based policies can have an adverse impact the analysis is relevant for countries that are generally characterized by heavy bureaucracies weak institutions and by large renewable potential

corruption types of corruption and firm financial performance new evidence from a transitional economy using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises the smes this paper contributes to the literature by considering for the first time the effects of corruption on the financial performance of vietnamese private smes interestingly contrary to previous findings we find that corruption when measured by a dummy variable does not affect firms financial performance after controlling for heterogeneity simultaneity and dynamic endogeneity however the intensity of bribery and the majority of the forms of corruption were found to have negative impacts on firms financial performance hence a typical approach using only a dummy variable for bribery might not adequately evaluate the impact of bribe intensity or even ignores the negative impacts of some types of bribes on firms financial performance the findings suggest that anti corruption measures are vital for the development of the vietnamese private smes

does corruption attenuate the effect of red tape on exports i use firm level data to examine whether corruption attenuates the adverse effects of red tape on exports i find that conditional on there being customs related red tape a firm is better off if it can use bribes to lower the delay that it faces however i also find that corruption has a negative overall effect on a firm s decision to export that is corruption prevents some firms from entering the export market these results suggest that to gauge the overall effect of corruption we must compare its red tape attenuating effect with its adverse effect on a firm s decision to export jel f10 f14 k42

the impact of product market competition on training provision evidence from canada while standard models of training focus on how input market affects firms training decisions this paper investigates the impact of product market competition on training provision using the longitudinal data from statistics canada s workplace and employee survey we find that increased competition is strongly associated with more training provision this association is unlikely to be driven by unobserved heterogeneity specific measures used and other relevant factors to the extent that training is a significant source of human capital and industry competitiveness our results suggest that increasing training is an important channel through which competition raises productivity

corruption governance and its dynamic stability based on a three party evolutionary game with the government the public and public officials abstractthe current state of corruption in china is still worrisome corruption among public officials depends not only on their subjective will but also on the success rate of government investig

taxes and bribes in uganda abstractusing data from 433 firms operating along uganda s charcoal and timber supply chains we investigate patterns of bribe payment and tax collection between supply chain actors and government officials responsible for collecting taxes and fees we examine the factors associated with the presence and magnitude of bribe and tax payments using a series of bivariate probit and tobit regression models we find empirical support for a number of hypotheses related to payments highlighting the role of queuing capital at risk favouritism networks and role in the supply chain we also find that taxes crowd in bribery in the charcoal market

accomplice witnesses and organized crime theory and evidence from italy we develop an agency model of organized crime accounting for the main trade offs involved in the introduction of an accomplice witness program we characterize the optimal policy and identify its main determinants in a framework where public officials can be dishonest our predictions are tested by using data for italy before and after the introduction of the 1991 accomplice witness program as predicted by the model and the earlier antitrust literature the program appears to have strengthened deterrence and enhanced prosecution moreover consistent with a novel prediction of our theory the evidence suggests that the program efficacy is affected by the judicial system efficiency

taxation and corruption theory and firm level evidence from uganda this article develops a simple framework to analyse the negotiation over bribe and tax payments during the tax collection process we show that the larger the bribe a firm offers to a tax collector the larger the tax rebate it gets more particularly we show that the negotiation over bribe and tax payments hinges on four other factors firms official liabilities detection firms negotiation power and red tape costs imposed on firms some of the predictions from the theoretical model are tested using firm level data from uganda we find that bribe and tax payments are inversely related thereby supporting the hypothesis of a negotiation taking place between firms and tax collectors in particular a 1 point increase in average bribe payments per employee is associated with a 7 point reduction in average amount of tax payments per employee results are robust to various instruments dealing with the endogenous relationship between bribes and taxes

bribe or die gender differences in entrepreneurship in emerging markets this paper examines the relation between gender differences in entrepreneurship and firm level bribery one of the most impactful business obstacles to private sector growth using data from a comp

investment climate and firm productivity an application to vietnamese manufacturing firms abstractthe fundamental aspect of a national competitive advantage is a good investment climate understanding the role of the investment climate in generating firm productivity has received extensive attention by policymakers and economists in many countries the article studies the effect of different dimensions of the investment climate on firm productivity using a large dataset of vietnamese manufacturing firms the article finds that deficiencies in the investment climate are prejudicial to firm productivity and competition furthermore in examining the effect of corruption in association with the quality of the business environment the study also investigates the possibility that corruption may compensate firms for a bad investment climate or at least may neutralize the negative impact of inefficient government regulations in other words corruption acts as speed money to improve the efficacy of the provision of public services or provides leeway for entrepreneurs to bypass the inefficient reg

deals and delays firm level evidence on corruption and policy implementation times whether demands for bribes for particular government services are associated with expedited or delayed policy implementation underlies debates around the role of corruption in private sector development the grease the wheels hypothesis which contends that bribes act as speed money implies three testable predictions first on average bribe requests should be negatively correlated with wait times second this relationship should vary across firms with those with the highest opportunity cost of waiting being more likely to pay and facing shorter delays third the role of grease should vary across countries with benefits larger where regulatory burdens are greatest the data are inconsistent with all three predictions according to the preferred specifications ceteris paribus firms confronted with demands for bribes take approximately 1 5 times longer to get a construction permit operating license or electrical connection than firms that did not have to pay bribes and respectively 1 2 and 1 4

business environment economic agglomeration and job creation around the world based on a comprehensive worldwide firm survey this paper looks at how the business environment and economic agglomeration affect job creation holding constant conventional determinants of firm growth such as firm ownership size and age the analysis finds that economic agglomeration is most important especially modern telecommunications access to export markets concentration of economic activity in large cities and capacity agglomeration the concentration of large firms in a city although the business environment affects job growth less than agglomeration does some elements of the business environment matter such as labor flexibility unionization and local skill levels there is strong heterogeneity in job creation across firm size and age

fractionalization polarization and economic growth identifying the transmission channels in this article we examine empirically both the direct and indirect links between ethnic fragmentation and economic growth we find that both ethnic fractionalization and polarization are negatively associated with growth if considered in isolation an effect that is though primarily attributed to their link to other growth related activities i e investment conflict control of corruption fertility we study the corresponding transmission channels and calculate their relative importance in explaining a development curse based on ethnic diversity for both measures of ethnic fragmentation we find the corruption channel to be the most important one

scottish banking before 1845 a model for laissez faire during the free banking era in eighteenth and early nineteenth century scotland there were a number of legal restrictions affecting the evolution of the system scottish banking was characterized by restrictions on small denomination and interest bearing notes there were also restrictions inhibiting the development of capital markets and entry into banking furthermore the bank of england operated as a shadow central bank for the scottish system these considerations call into question the use of the scottish banking experience as the appropriate model for laissez faire and as evidence against the legal restrictions theory of money and the new monetary economics copyright 1989 by ohio state university press

corruption in bank lending to firms cross country micro evidence on the beneficial role of competition and information sharing abstract building on the important study by beck demirguc kunt and levine 2006 bank supervision and corruption in lending journal of monetary economics 53 2131 2163 we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus registries on corruption in bank lending using the unique world bank data set wbes covering more than 4 000 firms across 56 countries with information on credit bureaus registries assembled by djankov mcliesh and shleifer 2007 private credit in 129 countries journal of financial economics 84 299 329 and bank regulation data collected by barth caprio and levine 2006 rethinking bank regulation till angels govern cambridge university press new york to measure bank competition and information sharing we find strong evidence that both banking competition and information sharing reduce lending corruption and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption we also find that the ownership structure of firms and banks legal environment and firm competition all exert significant impacts on lending corruption

corruption and investment theory and evidence from china abstract we consider a principal agent model to examine the conditions under which corruption prompts investment we also investigate three policies that can be used to combat corruption strengthening monitoring increasing compensation and enhancing accountability our theory suggests that increasing monitoring intensity mitigates corruption at the cost of reduced investment the most cost effective policy to control corruption is to enhance accountability which reduces corruption without decreasing growth enhancing investment we test our theo retical predictions using chinese infrastructure investment and corruption data the data show that infrastructure investment is negatively correlated with anti corruption effort as predicted by the theoretical model