Corruption and firms

Emanuele Colonnelli and Mounu Prem

No 17430, Documentos de Trabajo from Universidad del Rosario

Abstract: We estimate the causal real economic effects of a randomized anti- corruption crackdown on local governments in Brazil over the period 2003-2014. After anti-corruption audits, municipalities experience an increase in economic ac- tivity concentrated in sectors most dependent on government relationships. These effects spill over to nearby municipalities and are larger when the audits are covered by the media. Back-of-the-envelope estimates suggest that $1 away from corrup- tion generates more than $3 in local value added. Using administrative matched employer-employee and firm-level datasets and novel face-to-face firm surveys we argue that corruption mostly acts as a barrier to entry, and by introducing costs and distortions on local government-dependent firms. The political misallocation of resources across firms plays a seemingly secondary role, indicating that at the local level most rents are captured by politicians and public officials rather than firms.

Keywords: Corruption; firms; audits (search for similar items in EconPapers)
JEL-codes: D22 D73 H83 (search for similar items in EconPapers)
Pages: 56
Date: 2019-09-19
New Economics Papers: this item is included in nep-law, nep-pol and nep-sbm
References: Add references at CitEc
Citations: View citations in EconPapers (19)

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Related works:
Journal Article: Corruption and Firms (2022)
Working Paper: Corruption and Firms (2020)
Working Paper: Corruption and Firms (2019)
Working Paper: Corruption and Firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000092:017430

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