Corruption,development and demography

This paper presents an analysis of the joint, endogenous determination of bureaucratic corruption, economic development and demographic transition. The analysis is based on an overlapping generations model in which reproductive agents mature safely through two periods of life and face a probability of surviving for a third period. This survival probability depends on the provision of public goods and services which may be compromised by corrupt activities on the part of public officials. The dynamic general equilibrium of the economy is characterised by multiple development regimes, transition between which may or may not be feasible. In accordance with empirical evidence, the model predicts that low (high) levels of development are associated with high (low) levels of corruption and low (high) rates of life expectancy. The authors are grateful for the comments of two anonymous referees on an earlier version of the paper. The usual disclaimer applies.     

Corruption's Effect on Business Venturing Within the United States

In developing countries with high levels of corruption, people are often forced into small-business venturing or survivalist entrepreneurship because larger, more efficient firms do not exist. In developed countries, however, low corruption means that people choose entrepreneurship as a better means of innovating. In this article we use federal convictions of state and local officials and the Small Business Administration's firm formation data to test whether corruption within the United States forces some people into business venturing. We find that business venturing within the United States is caused in part by corruption.     

Corruption, Growth, and Income Distribution: Are there Regional Differences?

This paper uses panel data from 61 countries at different stages of economic development over a 20-year period to investigate regional differences in the effect of corruption on economic growth and income distribution. Using two measures of corruption, we find that there are statistically significant regional differences in the growth and distributional impacts of corruption. The largest growth impact of corruption is found in African countries while OECD and Asian countries have the lowest growth impact. On the other hand, the largest distributional impact of corruption in found in Latin America. A 10% decrease in corruption increases the growth rate of income by about 1.7% in OECD and Asian countries, 2.6% in Latin American countries, and by 2.8% in African countries. A one standard deviation decrease in corruption decreases the gini coefficient of income distribution (0–1 scale) by 0.05 points, 0.14 points, 0.25 points, and 0.33 points in OECD, Asian, African, and Latin American countries, respectively. The results are robust to various specifications, measurement of corruption, measures of investment, as well as the conditioning variables. The results have interesting policy implications for economic growth, especially in low income countries with high rates of corruption.     

Exports and cross-national corruption: A disaggregated examination

This paper empirically examines the relation between categories of exports and corruption across countries. Aggregate exports and agricultural exports tend to decrease corruption, while fuel exports increase corruption. The influence of agricultural exports in more pronounced in more corrupt nations, while fuel exports contribute to corruption in least corrupt nations. Manufacturing and ore exports, on the other hand, generally fail to show significant impacts on corruption. Our findings demonstrate that the resource curse is sensitive to prevailing corruption levels, and this finding is novel in the literature. Consistent with the extant literature, corruption decreases with income, and (at some corruption levels) as political freedom increases, and with larger government size. The findings are fairly robust to an alternate corruption measure.     

Deforestation, corruption, and private ownership in the forest sector

One of the remedies launched in combating corruption in the forest sector is privatization of state forests (and private forest ownership). We hypothesized that privatization could reduce deforestation through reducing corruption. We found a statistically significant strong positive relation between corruption and deforestation for the period between 1995 and 2008 by using two different corruption indices and panel data, a highly statistically significant negative correlation between private forest ownership and corruption across countries by using univariate and multivariate models for three different corruption indices, and a highly statistically significant negative correlation between private forest ownership and deforestation across countries by using univariate and multivariate models.     

Corruption in dictatorships

In this paper, we consider a simple model capable of explaining why some dictatorships choose to extract rents via seemingly inefficient institutions. In particular, this paper focuses on institutions associated with high levels of corruption and examines the conditions under which such institutions could serve the interests of a dictatorship. Developing such a model requires that we pose alternative institutions that dictators can choose to extract rents. Using this framework, this paper builds a model providing a theoretical basis for some stylized facts about the observed crosscountry variation in corruption levels. Specifically, the model motivates a rationale for the finding that higher levels of corruption are observed in countries characterized as having more heterogeneous populations, longer expected dictator tenure, and more severe punishment norms. The model is then estimated using international country level data.     

Corruption control,shadow economy and income inequality: Evidence from Asia

Developing countries often suffer from high corruption, high income inequality and poor institutional arrangements that give rise to large shadow economies. Earlier evidence shows that shadow economies moderate the negative effects of corruption on income inequality in highly unequal South American countries. For Asia, we show that the persistence of shadow economies raises inequality even if corruption control is strong. Supported by static and dynamic panel data analyses of 21 countries in Asia between 1995 and 2015, we show that in order to combat rising inequality, corruption control must be complemented by the ability to translate secondary and tertiary school enrolment into industrial and, more importantly, service sector jobs. Countries with low corruption but high inequality can reduce inequality by committing to higher public consumption expenditures. Further, combining greater trade openness with low corruption lowers inequality, except for countries in South Asia.     

A comparative study of bureaucratic corruption in Latin America and the U.S.A.

The starting point of this paper is a conceptual model of bureaucratic corruption, based on the assumption that bureaucrats (a) maximize personal utilities, and (b) control a monopoly in the production of certain goods and services. This conceptual model leads to a system of three equations representing demand, supply and market clearance of the goods and services supplied by the bureaucracy. Using the market clearance equation, an equation for the level of corruption in a bureaucracy is obtained. The conceptual model helps to specify the signs of the partial derivatives of the level of corruption with respect to the explanatory variables. Two sets of data are used to test the model. The first refers to levels of corruption in the bureaucracies of 17 Latin American countries, while the second deals with levels of corruption of Federal officials working in individual states in the U.S.A., state officials, and local officials. The conclusions obtained thus far using the statistical analysis confirm the expectations derived with the conceptual model.     

The relationship between economic freedom and peace

Classical liberals have long held that free markets foster peaceful societies. Many argue that free trade between nations will foster economic interdependence, and peace should ensue as a result. Nevertheless, there are many dissenters. While exploring the relationship between free trade and peace is important, it is only one part of ‘economic freedom.’ More research needs to be conducted to see how countries with high levels of entrepreneurship, low levels of corruption, independent judiciaries, and sound regulatory environments might be fostering peace.     

The effect of corruption on entrepreneurship in the presence of weak regulatory quality: Evidence from developing countries

Efforts to improve currently low entrepreneurship in developing countries could be necessary but likely hampered by the high corruption. With poor regulatory quality in most developing countries, the effect of corruption on entrepreneurship could be unique. By using the Generalized Method of Moments (GMM) estimator, utilizing 48 developing countries as the sample for the period from 2008 to 2016, this study finds that there is a conditional effect of corruption on entrepreneurship, implying that poor regulatory quality has forced and opened up the door for individuals to offer bribes in order to start a new business. Nonetheless, as corruption could add to the high cost of business start-ups, to enhance entrepreneurship, policymakers need to give priority to improving regulatory quality and, subsequently, force corruption to fade away.     

Women and corruption: evidence from multinational panel data

In this paper we investigate whether the ratio of female population is related with lower corruption, utilizing a multinational panel data with 80 countries for the period 2000–2012 and employing the Generalized Method of Moments as well as the ordered probit regression methods. This is the first study on the impacts of different female groups on corruption. Overall speaking, the estimation results are pluralistic. Higher female ratios in the legislative branch and in the labor force are significantly associated with a lower level of corruption, while the female ratio in secondary enrollment is positively related with corruption; however, the female ratio of the whole population has insignificant impacts on corruption. The policy implications are that a simple enhanced female ratio and educational level are not the effective way to inhibit corruption in our sample countries, whereas improvements of the female ratio in the legislative branch and the labor force contribute to controlling corruption. These results are basically robust for the two estimation methods and for the two subsamples of developed and developing countries. As a result, the estimation results on the relationship between corruption and gender might vary remarkably when different indicators for the female groups are utilized, which should some light on future studies.     

Can inflation targeting reduce price information asymmetry and alleviate corruptive behavior? Evidence from developing countries

This paper examines the role of inflation targeting as a price signaling mechanism reducing price information asymmetry and potentially reducing incentives for corruptive actions through its direct control on the inflation rate, thus simultaneously increasing institutional quality. The obtained evidence suggests that adopting inflation targeting lowers corruption in a sample of 61 developing countries for the period between 1990 and 2018. Countries that have adopted inflation targeting experience lower corruption levels, as measured by the corruption perceptions (CP) index, controlling for other relevant determinants of corruption identified in the empirical literature, such as inflation, level of income, income distribution, trade openness and the rule of law. This result is sensitive to the type of inflation targeting adopted. Soft (unofficial) inflation targeting has no significant effect on the corruption level, giving support to the claim that strong institutional commitment, accompanied by transparency and constant communication with regards to inflation targets by the central bank, provides an adequate price signaling mechanism. In addition, the analysis provides evidence that an efficient rule of law reduces corruption levels significantly, although its effects are rather modest to support the claims that it can solely lessen corruptive behavior in the sample of developing countries.     

Corruption and the ownership composition of the multinational firm at the time of entry: Evidence from Turkey

This paper presents an empirical assessment of the relationship between corruption and the ownership structure of foreign direct investment receipts by Turkey. Two forms of ownership structures are considered: joint venture and wholly owned subsidiary. The results indicate a strong negative impact of corruption on joint ventures, particularly for the ones originating from developed countries. As the degree of dissimilarity between corruption levels in the source country and Turkey diverges, the share of foreign ownership declines. This lends support to the transaction cost approach which emphasizes the expected increase in costs of sharing ownership in corrupt environments.     

Explaining cross‐national variations in the prevalence of envelope wages: some lessons from a 2013 Eurobarometer survey

The aim of this article is to evaluate competing theories that variously explain the greater prevalence of envelope wages in some countries either as: a legacy of under‐development (modernisation thesis); due to high taxes, state corruption and burdensome regulations and controls (neo‐liberal thesis), or a result of inadequate state intervention in work and welfare arrangements, which leaves workers less than fully protected (political economy thesis). Reporting a 2013 survey of cross‐national variations in the prevalence of envelope wages, the finding is that the results refute the neo‐liberal thesis but support both the modernisation and political economy theses, revealing that this illegitimate wage practice is more common in poorer, less equal countries with lower taxation and social protection levels and less effective redistribution via social transfers. The theoretical and policy implications are then discussed.     

Global human development: accounting for its regional disparities

This study’s multilevel statistical models quantify the effects of civilization zones and instrumental factors on the capacities for human agency that a country provides its citizens. These capacities are measured by the UN’s human development index, which synthesizes measures of literacy, longevity, and income. Indicators of political democracy, slavery, national debt, corruption, and internal conflict gauge the instrumental factors. Political freedom and emancipative employment coupled with civil order account for the regional differences in human development scores; civilization zones, heavily indebted poor countries, and corruption influence the variability among countries within the regions.     

Assessing the impact of individual and context factors on the entrepreneurial process. A cross-country multilevel approach

This paper attempts to fill the gap on the existing entrepreneurship literature by empirically testing the influence of two groups of individual-level factors (socio-economic, demographic and perceptual characteristics) and two groups of country-level factors (both formal and informal institutional measures and macroeconomic variables) on three stages of the entrepreneurial process. We analyze the interplay between individual and context factors in nascent, young and established entrepreneurs across 49 different countries, mixing data from different sources and applying multilevel binary logistic regression models. Our results show that entrepreneurial activities are male headed, irrespectively of the entrepreneurial stage of their activities, and that highly-educated entrepreneurs are more oriented to start up new ventures. The existence of a wider network of people involved in entrepreneurship contributes to updating information on new markets and opportunities, leading to a more accurate entrepreneurial decision. The level of development of a country constitutes an important determinant of entrepreneurship but also moderates the relationship between entrepreneurship and institutional factors. In more developed countries, individual characteristics may be still determinant factors shaping the decision to become an entrepreneur, although their magnitude may depend on the stage of the entrepreneurial process. Finally, the key to entrepreneurship for both more and less developed countries seems to be their fiscal systems: a fair tax system that actively fights tax evasion and corruption seems to be essential to reducing the economic pressure associated with the creation and survival of ventures.

     

Measures of corruption and determinants of US corruption

This paper contributes to the literature by examining whether conclusions from empirical models of corruption determinants are robust with respect to three alternative measures of corrupt activity for the US states. Are the determinants of US corruption sensitive to the choice of the measure of corruption? Overall, the answer to this question is that the choice of the measure of corruption matters in explaining corruption. However, some findings are robust across measures. For instance, greater educational attainment lowers corruption, while greater judicial employment adds to corruption. Southern states were found to be more corrupt, ceteris paribus. We also provide evidence that it is important to control for enforcement efforts in empirical modeling using convictions as a measure of corruption. Significant differences, however, across corruption measures occur in a number of other instances. Specifically, the effects of urbanization, economic prosperity, population size, media, government spending, and enforcement are sensitive to the measure of corruption. Further, the influences of the nation’s foreign neighbors and of the location of the state relative to the nation’s capital remain unclear.     

The macroeconomic implications of corruption in the choice to educate

Educational corruption is a worldwide phenomenon, yet its macroeconomic implications are largely unknown. We formulate a fixed-price bribe model to explore the impact educational corruption may have on growth, income inequality and other factors. When using aggregate ability as our measure of growth, our model produces a v-shaped relationship between growth and corruption, suggesting that corruption is detrimental to growth at lower levels of bribery, but growth enhancing at greater levels. A cross-section of countries is used to empirically test our model and provides qualitative support for our modeling structure. Distributional analysis reveals that an increased prevalence of corruption leads to greater income inequality and reduces the ability of education to signal quality.     

Formal and Informal Corruption Environments and Multinational Enterprise Social Irresponsibility

Using an institutional theory framework we theorize, hypothesize, and empirically show that higher levels of formal and informal corruption environments found in a firm's operating portfolio are related to higher levels of corporate social irresponsibility (CSiR). Failing to consider corruption's informal dimension leads to potentially false perceptions about a multinational enterprise's (MNE) operating environment, particularly when the formal dimension is low but the informal corruption dimension is high, as is the case in about one third of our sample. Including the informal corruption environment component provides additional explanatory power over the formal corruption environment alone in predicting CSiR and yields a superior understanding of both the formal and informal dimensions of the corruption institutional environment's influence on corporate social irresponsibility levels of MNEs. Managerial implications and future research directions are discussed.     

The effect of corruption on environmental performance: Does spatial dependence play a role?

Different from previous studies that mainly focused on conventional estimation techniques, this paper explores the role of spatial dependence in the effect of corruption on environmental performance by using a spatial panel data model. Our results show that the direct effects, indirect effects and total effects of corruption on environmental performance are negative and highly significant, implying that corruption is detrimental to environmental performance. More importantly, we find that there is a significant spatial spillover effect between corruption and environmental performance, namely being surrounded by highly corrupt countries has a negative impact on the local country’s environmental performance. Our results also suggest that a larger population density will worsen the environment, while urbanization has a significant positive impact. These results provide some important implications for policymakers seeking to improve their environmental performance.