Corruption and firm growth: evidence from around the world

Fisman, Raymond, Guriev, Sergei, Ioramashvili, Carolin and Plekhanov, Alexander (2024) Corruption and firm growth: evidence from around the world. Economic Journal, 134 (660). 1494 -1516. ISSN 0013-0133

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Abstract

We empirically investigate the relationship between corruption and growth using a firm-level dataset that is unique in scale, covering almost 88,000 firms across 141 economies in 2006–20, with wide-ranging corruption experiences. The scale and detail of our data allow us to explore the corruption-growth relationship at a very local level, within industries in a relatively narrow geography. We report three empirical regularities. First, firms that make zero informal payments tend to grow slower than bribers. Second, this result is driven by non-bribers in high-corruption countries. Third, among bribers, growth is decreasing in the amount of informal payments—in both high- and low-corruption countries. We suggest that this set of results may be reconciled with a simple model in which endogenously determined higher bribe rates lead to lower growth, while non-bribers are often excluded entirely from growth opportunities in high-corruption settings.

Item Type:	Article
Official URL:	https://academic.oup.com/ej
Additional Information:	© 2024 The Author(s)
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HV Social pathology. Social and public welfare. Criminology H Social Sciences > HG Finance
JEL classification:	D - Microeconomics > D2 - Production and Organizations > D20 - General O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
Date Deposited:	24 Jun 2024 10:45
Last Modified:	12 Nov 2024 17:24
URI:	http://eprints.lse.ac.uk/id/eprint/123951

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