Corruption, Manufacturing Plant Growth, and the Asian Paradox: Indonesian Evidence
Virginie Vial () and
Julien Hanoteau ()
World Development, 2010, vol. 38, issue 5, pages 693-705
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.
Keywords: corruption; taxation; plant; growth; and; productivity; Asia; Indonesia (search for similar items in EconPapers)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:wdevel:v:38:y:2010:i:5:p:693-705
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