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Corruption, bureaucracy and other institutional failures: the “cancer†of innovation and development

Leonardo Rocha (), Maria Ester Dal Poz (), Patrícia Lima (), Ahmad Khan () and Napiê Silva ()
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Leonardo Rocha: Federal Rural University of the Semi-arid
Maria Ester Dal Poz: University of Campinas
Patrícia Lima: Federal University of Ceará
Ahmad Khan: Federal University of Ceará
Napiê Silva: Federal Rural University of the Semi-arid

Economics Bulletin, 2019, vol. 39, issue 3, 1740-1754

Abstract: This study analyzes the impact of corruption on the elasticity of R&D investments in sales per worker by firms. In this sense, it built a model of Schumpeterian growth using optimal control theory relating the effects of corruption on demand for R&D. The model results show that corruption negatively affects the R&D demand and long-term rate of technical progress. However, this cost attributes different 'weights' as firms approach the technological frontier. To empirically test this relationship, it was built partial order-ï ¡ frontiers on a sample of 2,000 firms from 40 sectors and 46 countries. Interacting efficiency scores with the corruption index, the less-efficient firms are disadvantaged with corruption in relation to the frontier firms. This pattern is observed in the coefficient of elasticity of R&D investments indicating that corruption leads to different costs, 'favoring' the most efficient firms in relation to the most backward firms.

Keywords: Corruption; Innovation; Development (search for similar items in EconPapers)
JEL-codes: O2 O3 (search for similar items in EconPapers)
Date: 2019-07-12
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