Corruption and productivity: firm-level evidence from the BEEPS survey
Donato De Rosa (),
Nishaal Gooroochurn and
No 5348, Policy Research Working Paper Series from The World Bank
Using enterprise data for the economies of Central and Eastern Europe and the CIS, this study examines the effects of corruption on productivity. Corruption is narrowly defined as the occurrence of informal payments to government officials to ease the day-to-day operation of firms. The effects of this"bribe tax"on productivity are compared to the consequences of red tape, which may be understood as imposing a"time tax"on firms. When testing effects in the full sample, only the bribe tax appears to have a negative impact on firm-level productivity, while the effect of the time tax is insignificant. At the same time, unlike similar studies using country-level data, firm level analysis allows a direct test of the"efficient grease"hypothesis by investigating whether corruption may increase productivity by helping reduce the time tax on firms. Results provide no evidence of a trade-off between the time and the bribe taxes, implying that bribing does not emerge as a second-best option to achieve higher productivity by helping circumvent cumbersome bureaucratic requirements. When controlling for EU membership the effects of the bribe tax are more harmful in non-EU countries. This suggests that the surrounding environment influences the way in which firm behaviour affects firm performance. In particular, in countries where corruption is more prevalent and the legal framework is weaker, bribery is more harmful for firm-level productivity.
Keywords: Environmental Economics&Policies; Public Sector Corruption&Anticorruption Measures; Political Economy; Economic Theory&Research; Emerging Markets (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-eur and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28) Track citations by RSS feed
Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/WPS5348.pdf (application/pdf)
Working Paper: Corruption and productivity firm-level evidence from the BEEPS survey (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:5348
Access Statistics for this paper
More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().