Does Corruption Discourage Entrepreneurship?

Donghyun Park and Kwanho Shin

No 670, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Although entrepreneurship plays a key role in economic development, it remains largely unknown. The reason is that it is challenging to measure entrepreneurship objectively and identify its determinants. In this paper, we analyze the effect of a particular feature of the institutional landscape, namely corruption, on entrepreneurship. It is expected that corruption discourages entrepreneurship since it undermines fair competition. We employ two proxies for entrepreneurship that are widely used in the literature: (i) nascent entrepreneurship collected from Global Entrepreneurship Monitor; and (ii) entry rate defined as the number of new firms divided by the total number of previous year’s registered businesses, collected from the World Bank Group Entrepreneurship Survey. We find that better control of corruption promotes entrepreneurship. Our findings are preserved when we add other determinants of entrepreneurship which are drawn from the literature. When we use legal origins as instruments for corruption, our results remain essentially the same.

Keywords: entrepreneurship; corruption; institution; corporate tax; legal origin (search for similar items in EconPapers)
JEL-codes: D22 D53 D73 E02 E60 G38 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2022-09-02
New Economics Papers: this item is included in nep-ent, nep-sbm and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.adb.org/publications/does-corruption-discourage-entrepreneurship Full text (text/html)

Related works:
Journal Article: Does Corruption Discourage Entrepreneurship? (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0670

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().