How Bribery Distorts Firm Growth : Differences by Firm Attributes

How Bribery Distorts Firm Growth : Differences by Firm Attributes

How corruption affects economic performance has been studied for over a decade. Yet the lack of detailed firm-level data has limited research regarding who is carrying the real burden of corruption. This study shows that for firms in the Latin America and Caribbean region, bribery significantly distorts firm growth. Firms that pay bribes when conducting business transactions -- such as applying for permits, electricity, or water connections -- have 24 percent lower annual sales growth than firms that do not face such solicitations. Moreover, these distortions are more severe for low-revenue-generating and young firms. Using the instrumental variables method, the authors show that these results are robust to different specifications and the use of different sub-samples.

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Bibliographic Details
Main Authors: Şeker, Murat, Yang, Judy S.
Language:English
Published: World Bank, Washington, DC 2012-04
Subjects:ABUSE, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCE, BACKBONE, BRANCH, BRIBE, BRIBERY, BRIBES, BUSINESS ACTIVITIES, BUSINESS CLIMATE, BUSINESS ENVIRONMENT, BUSINESS ENVIRONMENTS, BUSINESS OPERATIONS, BUSINESS TRANSACTION, BUSINESS TRANSACTIONS, CAPITAL FLOWS, COMMODITY, CORRUPT, CORRUPT OFFICIAL, CORRUPT OFFICIALS, CORRUPTION, CORRUPTION PERCEPTION, CORRUPTION PERCEPTION INDEX, CPI, CPI SCORES, CRIME, ECONOMIC ACTIVITIES, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ELECTRICITY, EMPLOYMENT, EMPLOYMENT GROWTH, ENTERPRISE SURVEY, ENTERPRISE SURVEYS, ENTREPRENEURIAL ABILITIES, ENTREPRENEURIAL ABILITY, ENTREPRENEURSHIP, EXCHANGE RATES, EXCLUSION, EXTERNAL FINANCING, FINANCIAL BURDEN, FINANCIAL CONSTRAINTS, FIRM SIZE, FIRM SIZES, FIRMS, FOREIGN DIRECT INVESTMENT, FOREIGN OWNERSHIP, GOVERNMENT OWNERSHIP, GOVERNMENT SERVICES, GROUP OF FIRMS, GROWTH POTENTIAL, INNOVATION, INSPECTIONS, INTERNATIONAL BANK, INTERNATIONAL STANDARD, INTERNATIONAL TRADE, JOB CREATION, KNOWLEDGE BASE, LEADERSHIP, LEGAL CONSTRAINTS, LICENSE, LICENSES, MANUFACTURING, OPEN ACCESS, PERFORMANCE MEASURES, PETTY CORRUPTION, PRIVATE SECTOR, PRIVATE SECTOR DEVELOPMENT, PRODUCT INNOVATION, PRODUCTIVITY, PROPRIETORSHIP, PROPRIETORSHIPS, PUBLIC OFFICIALS, R&D, REAL ESTATE, RESULT, RESULTS, RETAIL TRADE, SALES GROWTH, SENSITIVITY ANALYSES, SIZE OF FIRMS, SMALL BUSINESS, SMALL BUSINESS GROWTH, SMALL FIRMS, SME, SOLICITATION, SOLICITATIONS, TARGETS, TAXATION, TECHNOLOGICAL INNOVATION, TRANSPARENCY, WEB,
Online Access:http://documents.worldbank.org/curated/en/2012/04/16237366/bribery-distorts-firm-growth-differences-firm-attributes
https://hdl.handle.net/10986/6049
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Summary:How corruption affects economic performance has been studied for over a decade. Yet the lack of detailed firm-level data has limited research regarding who is carrying the real burden of corruption. This study shows that for firms in the Latin America and Caribbean region, bribery significantly distorts firm growth. Firms that pay bribes when conducting business transactions -- such as applying for permits, electricity, or water connections -- have 24 percent lower annual sales growth than firms that do not face such solicitations. Moreover, these distortions are more severe for low-revenue-generating and young firms. Using the instrumental variables method, the authors show that these results are robust to different specifications and the use of different sub-samples.

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