The impact of local financial development on firm growth in Vietnam: Does the level of corruption matter?

We examine the effects of province-level financial development and corruption on the performance of Vietnamese firms in terms of the growth rates of sales, investment and sales per worker. Employing a large firm-level dataset of more than 40,000 firms for the period 2009–2013 and applying a heteroskedasticity-based identification strategy, we find that province-level financial development promotes firm growth, while corruption hinders it. Most importantly, the marginal effect of financial development on firm growth depends negatively on the level of corruption. Moreover, financial development exacerbates the growth-retarding effect of corruption.     

Greece in the Eurozone: Lessons from a decade of experience

This study examines Greece's experience as a member of the Eurozone over the period 2002 to 2011. In evaluating the Greek experience within the Eurozone, we derive the following fundamental policy lessons that apply both to similar small peripheral EU countries that plan to enter the Eurozone, or any other economic union, and to the Eurozone itself in terms of facilitating their integration in a large monetary union. First, countries with inefficient public systems must re-engineer and restructure the decision making process in the public sector before they become members of an economic union. Second, countries must generate a friendly environment toward business and provide (a) a simple, stable tax system, (b) an effective and efficient justice system, and (c) a high quality educational system. Third, the living standards of the people are determined by the productivity and competitiveness of the economy and not by an inefficient and overspending public sector. Fourth, structural funds should be used to improve the competitiveness of the economy, not serve the political clientele of the party in power. Fifth, the admission requirements to an economic union must be strict and these requirements must be enforced. Sixth, capital market investors must always differentiate default risk within the country-members of a monetary union.     

On the optimality of nonmaximal fines in the presence of corruptible law enforcers

In this paper, we develop a model of law enforcement with the possibility of corruption between enforcers and potential offenders. We study how the violation rate changes with the level of the fine imposed on violations. We find, in contrast to the conventional wisdom, that the fine level that minimizes violations can be intermediate rather than large. We then study conditions under which different fine levels would be optimal.      

Corruption and industrial dualism in less developed countries

This paper provides an explanation for the observation that developing countries tend to have a higher degree of dualism in the size distribution of firms and a relatively smaller proportion of large firms than do developed countries. This paper builds a model where large 'formal' firms attract rent seeking activities from the government while small firms do not. In the model, there exists a 'competitive fringe' of small firms and a formal market consisting of Cournot competitors. The number of formal firms is made endogenous and is a function of the degree to which the government can extract rents. This ability to extract rents is itself posited as a function of the degree of corruption in a country's government. Thus, it is the high degree of corruption in developing country governments that contributes to the dual nature of their industrial structure. The model predicts that the higher the degree of corruption, the fewer (and larger) are the formal firms, the lower is social welfare and the greater is dead-weight loss, and the higher are government rents. An examination of the size distribution of 16 countries and their degree of corruption shows that the degree of corruption is a good predictor of the percentage of large firms in an economy.     

Host-country governance, tax treaties and US direct investment abroad

We investigate how the quality of the host-country governance and a bilateral US income tax treaty affect the rates of return that US companies require on their foreign direct investment (FDI). Using indexes of corruption and political instability, we find that poor governance causes the companies to require significantly higher rates of return. This lends support to earlier authors who have concluded that poor governance discourages both local investment and inward FDI. After accounting for the quality of host-country governance, however, no evidence could be found that an income tax treaty has any effect on the required rates of return.      

Corruption and privatization

This paper analyses the relation between corruption and privatization. In particular, we study how corruption affects the acquisition price and the post-privatization market structure. The model predicts that privatization in countries with highly corrupt government results in a higher degree of market concentration than in countries where governments are less corrupt. The acquisition price is also likely to be higher when a government is highly corrupt than when government officials are honest or moderately corrupt. Finally, and perhaps surprisingly, we demonstrate that a stronger propensity to embezzle state revenues may reduce government officials' benefits from corruption. The reason is that the more eager the government officials are to take bribes, the cheaper they are to buy.     

加强廉政建设遏制腐败现象

通过对加强廉政建设的重要性，腐败现象的本质及造成原因的分析，提出了解决腐败现象的措施。     

Corruption and public finance: an IMF perspective

Public finance should be a means whereby governments in low-income countries are able to increase economic growth and end poverty. Corruption, however, reduces tax revenue and makes public expenditure policies ineffective for achieving social objectives. The papers in this volume, which is sponsored by the Fiscal Affairs Department of the International Monetary Fund (IMF), describe how corruption makes public finance ineffective in promoting economic development.     

Corruption: Theory and evidence from the Russian Federation

In this paper, we provide theory and evidence on the problem of corruption in the Russian Federation. Our theoretical model indicates that in the presence of official corruption, the numbers of tax inspection (collection) employees could be inversely related to per capita tax collection. Our empirical analysis supports our theoretical model, shedding light on one of the most intractable problems in the Russian Federation.     

A vulnerable victim or a tacit participant? Extending the field of multinationals and corruption research

Are multinational enterprises (MNEs) makers or takers of corruption? This review focuses on corruption in the multinational context to highlight issues specific to MNEs, and captures 139 articles from 75 English journals over the period of 1999?2020. Our review not only highlights common themes around the contextual challenges facing MNEs, but also how a key strand of the literature focuses attention on the role of MNEs as active agents in corrupt practices. It is often implied that corruption is something endemic to the emerging markets, which MNEs from the north have to cope with if they have to do business there, rather than what significant numbers of such firms actively instigate or sustain. Hence, we challenge predominantly western perspectives informed by institutional-economic analyses that too often, pose a false dichotomy between the global north and global south. We draw out the implications for theorizing based on recent comparative institutional theorizing.