Corruption and Firm Performance in Africa

John McArthur and Francis John Teal
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John McArthur: Centre for the Study of African Economies

Development and Comp Systems from EconWPA

Abstract: This paper uses survey data to investigate empirically the importance of corruption in determining firm performance in Africa. We allow for the possibility of perception bias on the part of the respondents and for corruption being endogenous. We find that corruption is linked to significant adverse effects on firm performance in two ways. At the firm (or ^Slocal^T) level, companies that pay bribes have 20 percent lower levels of output per worker. At the economywide (or ^Sglobal^T) level, firms in countries with pervasive corruption are some 70 per cent less efficient than firms in countries free of corruption. We thus provide evidence that competitive uncoordinated local corruption has substantial global effects.

JEL-codes: O P (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: 2004-09-15
Note: Type of Document - pdf; pages: 32
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http://129.3.20.41/eps/dev/papers/0409/0409015.pdf (application/pdf)

Related works:
Working Paper: Corruption and Firm Performance in Africa (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpdc:0409015

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