Is corruption a greater burden for registered MSEs? Evidence from Zambia

If corrupt bureaucrats target registered firms, then corruption may discourage registration. Using data from a survey of 4,801 micro and small enterprises (MSEs) in Zambia, this paper looks at whether corruption is a more or less serious problem for registered MSEs. Consistent with earlier studies, the results suggest registered MSEs are more concerned about corruption than unregistered firms are. The paper also proposes two reasons why corruption might affect registered MSEs differently than it affects unregistered firms. We first suggest that registered firms might meet with government officials more often than unregistered firms, giving corrupt officials more opportunities to demand bribes from them, but we also suggest that registered firms might be less vulnerable when officials demand bribes because they are more able to complain about bribe demands. This could offset registered firms' disadvantage because of more frequent meetings. The evidence supports the first, but not the second, hypothesis. Registered firms were more likely to meet with government officials but were not consistently less likely to pay bribes when they did meet with them.     

Politicians at higher levels of government are perceived as more corrupt

The relationship between decentralization and corruption has been discussed extensively, but little is known about the variation of corruption across government levels. Using an original survey where French citizens were asked to assess corruption at all levels of government, we observe that corruption perceived at a government level is higher, the higher the government level in the government hierarchy. Specifically, municipal governments are perceived as the least corrupt, followed by local governments, senators, deputies, and the national cabinet. The president of the Republic is perceived as slightly less corrupt than the national cabinet, but more corrupt than any other level of government. The relationship is robust to alternative specifications, controlling for a series of individual and regional characteristics, and to alternative definitions of the dependent variable. The finding is not reducible to geographic distance. We observe it in several other countries.     

Corruption,competition and democracy

This paper presents a model of the interaction between corrupt government officials and industrial firms to show that corruption is antithetical to competition. It is hypothesized that a government agent that controls access to a formal market has a self-interest in demanding a bribe payment that serves to limit the number of firms. This corrupt official will also be subject to a detection technology that is a function of the amount of the bribe payment and the number of firms that pay it. Under quite normal assumptions about the shape of the graph of the detection function, multiple equilibria can arise where one equilibrium is characterized by high corruption and low competition, and another is characterized by low corruption and high competition. Some suggestive empirical evidence is presented that supports the main hypothesis that competition and corruption are negatively related.     

Are electronic government innovations helpful to deter corruption? Evidence from across the world

Electronic government innovations have been a critical development in public administration in recent years. Many countries have implemented e-government policies to enhance efficiency and transparency and combat corruption. This paper examines the impact of e-government on corruption using longitudinal data for more than 170 countries from 2002 to 2020. The empirical results suggest that e-government serves as a deterrent to corrupt activities. We analyse which e-government domains affect corruption, which types of corruption are more affected by e-government and the circumstances under which e-government is more effective in reducing corruption. The empirical results suggest that online service completion and e-participation are important features of e-government as an anticorruption tool. Evidence suggests that e-participation reduces corrupt legislature activities, public sector theft, executive bribery, and corrupt exchanges. The potential of e-government to deter corruption is higher in countries where corruption is moderate or high and economic development is lower. Higher levels of GDP per capita, foreign direct investment, and political rights are also associated with lower levels of corruption.     

Tax Evasion,Corruption and Market Entry

We analyze the impact of tax policy on the market entry of firms in the presence of corruption and tax evasion. In a world with corruption, firms must bribe corrupt officials to enter the market. For a given level of bribes, higher tax rates and stricter enforcement of taxation decrease tax evasion but typically reduce market entry. However, when the level of bribes reacts to tax policy, higher taxes and stricter enforcement of taxation can have a double benefit. Up to a certain threshold, for which we develop a simple rule, stricter enforcement increases market entry and reduces tax evasion.     

Who gains from non-collusive corruption?

Non-collusive corruption, i.e., corruption that imposes an additional burden on business activity, is particularly widespread in low-income countries. We build a macroeconomic model with credit market imperfections and heterogeneous agents to explore the roots and consequences of this type of corruption. We find that credit market imperfections, by generating rents for the incumbent entrepreneurs, create strong incentives for corrupt behavior by state officials. However, non-collusive corruption not only redistributes income from non-officials towards officials but also within the group of potential entrepreneurs. If borrowing is limited, bribes prevent poorer but talented individuals from starting a business. But this is likely to benefit those who may enter anyway; the cost of capital is lower and there is less competition on the goods markets.     

INTERMEDIATED CORRUPTION

I model the role of intermediaries in corruption and examine the effects of policy on the level of intermediated corruption, price of permits, and welfare. Intermediaries with a history of being honest earn higher premiums. The frequency of corrupt transactions is inversely related to income levels. When the government increases the fraction of profits that it extracts from entrepreneurs, intermediation intensifies, as entrepreneurs are reluctant to obtain licenses through legal means. Therefore, when business costs are high, measures to combat corruption transfer value to intermediaries. Increasing the frequency of governments audits can increase the equilibrium price of permits.     

The political economy of corruption and the role of economic opportunities1

In many developing and transition countries, we observe rather high levels of corruption. We argue that the missing political support for anti‐corruption policies is due to a lack of economic and financial reforms. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. In a probabilistic voting model, we show that this, together with the lack of economic opportunities, makes anti‐corruption policies less likely. Compared to a reformed economy, more voters are part of the corrupt system and, more importantly, rents from corruption are distributed differently. Economic liberalization increases the support for anti‐corruption measures. The additional effect of financial liberalization is ambiguous.     

Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?

Corruption is harmful for public finances and appears closely related to fiscal deficits. We open a new avenue in addressing the effects of corruption on public deficits through fiscal decentralization. For a sample of 31 OECD countries over the period 1986–2010, we find that fiscal decentralization contributes to mitigating the adverse effects of corruption on public deficits. In addition, our findings indicate diversity in the effects of fiscal decentralization, in that it appears related to lower deficits in countries with higher levels of corruption but not in less corrupt countries. Our results suggest that bringing the government closer to the people through fiscal decentralization in relatively corrupt countries leads to more responsible fiscal management.     

Intermediaries in corruption: an experiment

Anecdotal evidence suggests that intermediaries are ubiquitous in corrupt activities; however, empirical evidence on their role as facilitators of corrupt transactions is scarce. This paper asks whether intermediaries facilitate corruption by reducing the moral or psychological costs of possible bribers and bribees. We designed bribery lab experiment that simulates petty corruption transactions between private citizens and public officials. The experimental data confirm that intermediaries lower the moral costs of citizens and officials and, thus, increase corruption. Our results have implications with respect to possible anti-corruption policies targeting the legitimacy of the use of intermediaries for the provision of government services.     

Political connection,corporate philanthropy and efficiency: Evidence from China’s anti-corruption campaign

We find that the 2013 Chinese anti-corruption campaign remarkably reduced charitable donations from listed companies with strong political connections, and lessened government subsidies to these companies, implying a reciprocal relationship between companies and the government prior to the campaign. The campaign also improved the productivity of companies with strong connections. The results are consistent with a model in which favor exchanges between firms and the government divert resources away from production in a corrupt environment. These findings highlight a self-serving, and sometimes corrupt, motive of corporate donation, and imply that the campaign is effective in curbing corrupt collusion between companies and government officials. Moreover, they give empirical support to the negative efficiency implications of corruption.     

Do existing corruption levels matter in controlling corruption? : Cross-country quantile regression estimates

We examine the determinants of corruption using recent cross-sectional data for nearly one hundred countries. While the causes of corruption have drawn economists' interest in recent years, our main contribution is to examine the corruption determinants throughout the conditional distribution of corruption across nations. Are there different causes of corruption in highly corrupt nations compared to the least corrupt countries? For instance, we examine whether greater democracy and more economic freedom consistently reduce corruption among the most and the least corrupt. Our results for the significant determinants support some findings in the literature, but also provide new conclusions. In many cases, quantile regression estimates are quite different from those from OLS regressions. Among the most corrupt nations, larger governments and greater economic freedom do not appear to reduce corruption, but greater democracy seems to alleviate it. Our results suggest that some current corruption control policies may be reconsidered, especially among the most corrupt and least corrupt nations.     

INDUSTRIAL LICENSING,BRIBERY AND ALLOCATION EFFICIENCY*

In less developed countries where an industrial licensing policy governs the entry of new firms, and when government officials awarding these licenses are corrupt, an incumbent firm may deter entry by bribing the official to deny the license. The paper demonstrates that such bribery can lead to the exclusion of more efficient firms from the market. This contradicts the established result that bribery does not affect allocation efficiency.     

CROSS‐COUNTRY EVIDENCE OF CORRUPTION SPILLOVERS TO FORMAL AND INFORMAL ENTREPRENEURSHIP

Using cross‐country data this paper examines the spillovers of corruption to formal and informal entrepreneurship in neighboring countries. Whereas research has shown that entrepreneurs move underground to escape corruption, we argue that entrepreneurs may also seek refuge in neighboring countries. Indeed, the empirical results show that in response to a ceteris paribus increase in corruption in neighboring countries formal entrepreneurship increases in the home country with no effect on informal entrepreneurship. This is consistent with entrepreneurs circumventing corrupt public officials by immigrating to countries with presumably less corruption. These results withstand a battery of robustness checks. (JEL D73, L26)     

Do existing corruption levels matter in controlling corruption?: Cross-country quantile regression estimates

We examine the determinants of corruption using recent cross-sectional data for nearly one hundred countries. While the causes of corruption have drawn economists' interest in recent years, our main contribution is to examine the corruption determinants throughout the conditional distribution of corruption across nations. Are there different causes of corruption in highly corrupt nations compared to the least corrupt countries? For instance, we examine whether greater democracy and more economic freedom consistently reduce corruption among the most and the least corrupt. Our results for the significant determinants support some findings in the literature, but also provide new conclusions. In many cases, quantile regression estimates are quite different from those from OLS regressions. Among the most corrupt nations, larger governments and greater economic freedom do not appear to reduce corruption, but greater democracy seems to alleviate it. Our results suggest that some current corruption control policies may be reconsidered, especially among the most corrupt and least corrupt nations.     

Country governance,corruption, and the likelihood of firms’ innovation

Using a sample of firms from the World Bank Enterprise Survey for the period 2006–2016 in emerging and developing countries, we find that corruption has a negative impact on the likelihood of innovations, thus supporting the “sanding-the-wheels” hypothesis. Our empirical results also show that corruption at the firm level, in the manufacturing industry, and in regions with the worst governance or that are more corrupt has a significant negative effect on innovation. In addition, country governance plays a particularly important role in innovative activity for corrupt firms. The policy implication is that the government or authority should strengthen the positive role of government effectiveness, rule of law, regulatory quality, and control of corruption in order to improve firms’ innovation within an environment of corruption.     

政府规模、市场化与地区腐败

Using a panel data at the provincial level during the period of 1989–2004, this paper examines the effects of social and economic factors such as government scale, privatization, openness, and education on regional corruption. Applying a fixed-effect model and IV estimation, we find that government size positively affects the incidence rate of corruption, and the effect becomes larger with the increase in the size of the core department of the government. 1% increase in the core department of the government leads to a 0.68%–1% increase in the number of corruption cases. While the proportion of FDI is positively associated with the corruption of regional officials, the ratio of the import and export trade to GDP is negatively associated with corruption. The impact of privatization on corruption is ambiguous. We also identify the significant impacts of the size and structure of the government expenditure on corruption. __________ Translated from Jingji Yanjiu 经济研究 (Economic Research Journal), 2008, (11): 16–26     

A journey from a corruption port to a tax haven

We sketch a model according to which tax havens attract corporate income generated in corrupted countries. We consider the choice of optimal bribes by corrupt officials and the share of the proceeds of corruption that will be concealed in tax havens. Our framework provides novel welfare implications of tax havens. First, tax havens’ services have a positive effect on welfare through encouraging investment by firms fearing expropriation and bribes in corrupt countries. Second, by supporting corruption and the concealment of officials’ bribes, tax havens discourage the provision of public goods and hence have also a negative effect on welfare. The net welfare effect depends on the specified preferences and parameters. One source of this ambiguity is that the presence of multinational firms in corrupted countries is positively associated with demanding tax havens’ operations. Using firm-level data, we provide new empirical results supporting this hypothesis.     

Group Dynamics of Corruption in Public Organizations

Abstract

When there are two groups of officials in a public organization, we show that depending on the groups’ behavior – collusive or competitive – increasing the level of monitoring and punishment may have different impacts on corruption. If the two groups of public officials had been demonstrating collusive behavior, increased monitoring or punishment reduces both the level of corrupt activities and the corrupt officials’ bribe revenues. However, if the groups had not been colluding, increased monitoring reduces the level of corruption, but increases the corruption revenues collected. Only after reaching the optimum level of monitoring, is this result reversed.     

基于行为决策理论的腐败行为分析及其治理

通过对行为决策理论的腐败选择行为模型的分析和研究,我们发现,对于面对损失具有风险偏好倾向的腐败者,虽然位卑权小时廉洁守法,升职后却可能走向腐败.而且,一个弹性的惩罚制度环境会增加行为人的违规价值预期,强化行为人逃避严惩的侥幸心理,加剧腐败行为蔓延.所以,建立科学合理的用人机制,优化监督环境,提高惩罚制度的执行力,是遏制腐败蔓延的有效手段.