Firm Growth and Corruption: Empirical Evidence from Vietnam
Edmund J Malesky and
Benjamin A Olken
Economic Journal, 2019, vol. 129, issue 618, 651-677
This article tests whether firm growth reduces corruption, using data from over 10,000 Vietnamese firms. We employ instrumental variables based on growth in a firm's industry in other provinces within Vietnam and in China. We find that firm growth reduces bribes as a share of revenues. We propose a mechanism for this effect whereby government officials' decisions about bribes are modulated by inter-jurisdictional competition. This mechanism also implies that growth reduces bribery more for more mobile firms; consistent with this prediction, we find a larger effect for firms with transferable rights to their land or operations in multiple provinces.
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Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:129:y:2019:i:618:p:651-677.
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