Measuring Governance, Corruption and State Capture: How Firms and Bureaucrats Shape the Business Environment in Transition Economies

Joel S. Hellman, Geraint Jones, Daniel Kaufmann and Mark Schankerman
Additional contact information
Joel S. Hellman: The World Bank
Geraint Jones: MIT
Mark Schankerman: London School of Economics; Centre for Economic Policy Research

Development and Comp Systems from University Library of Munich, Germany

Abstract: Recent studies have focussed on the characteristics and policies of the state to explain the extent and causes of corruption, with little attention paid to the role played by firms. Consequently, the links between corporate governance and national governance have been unexplored. This paper summarises the results of the Business Environment and Enterprise Performance Survey (BEEPS) across 20 transition economies, providing an assessment of governance and corruption from the perspective of firms. The BEEPS is part of the global World Business Environment Survey being carried out by the World Bank. The survey design permits an in-depth empirical analysis of governance and corruption, unbundling governance into its component dimensions. This allows a more detailed quantitative assessment of corruption, a more nuanced understanding of the causes of the problem and as a result a stronger foundation for policy advice. Particular attention is paid to 'state capture' by parts of the corporate sector (i.e. the propensity of firms to shape the underlying 'rules of the game' including 'purchase' of legislation and court decisions). The survey also provides measures of other dimensions of 'grand corruption', such as that related to public procurement. Typically, cross-country surveys suffer from a potential bias if firms have a tendency to systematically over- or under-estimate the extent of problems in their own country. We implement a simple method for evaluating the extent of this 'country perception bias' and find little evidence pointing to such bias in the BEEPS.

Keywords: Governance; corruption; state capture; transition economies (search for similar items in EconPapers)
JEL-codes: C42 C81 D4 H4 K2 L1 L5 M2 O1 P5 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2003-08-27
New Economics Papers: this item is included in nep-lam, nep-law, nep-pbe and nep-pol
Note: Type of Document - Acrobat PDF; pages: 47
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Measuring governance, corruption, and State capture - how firms and bureaucrats shape the business environment in transition economies (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpdc:0308004

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