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Intervention, corruption and capture: the nexus between enterprises and the state

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Author Info

  • Joel Hellman

    (World Bank, and the London School of Economics)

  • Mark Schankerman

    (European Bank for Reconstruction and Development)

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    Abstract

    We study the nexus between enterprises and the state in transition countries, using new enterprise survey data. We examine the quality of governance, state intervention in enterprise decision-making, state benefits to firms and corruption payments. The quality of governance varies both across countries and across different dimensions of governance within countries. Economic reform improves governance in countries with a low degree of “state capture” by vested interests, but not in high-capture countries. Despite reform, state intervention in firm decisions continues, but it varies substantially across firms. At the micro level (within a country), there is clear substitution between the degree of state intervention, state benefits to firms and corruption payments, which is consistent with a bargaining model of politicians and firms. But at the macro level (across countries) these elements are complementary, suggesting that politicians, perhaps under pressure from captor firms, have some control over the scope of regulation and intervention.

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    Bibliographic Info

    Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 58.

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    Length: 31 pages
    Date of creation: Oct 2000
    Date of revision:
    Handle: RePEc:ebd:wpaper:58

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    Related research

    Keywords: corruption; governance; capture;

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    Cited by:
    1. Libman, Alexander, 2008. "Government-business relations in post-Soviet space: The case of Central Asia," MPRA Paper 11874, University Library of Munich, Germany.
    2. Independent Evaluation Group, 2008. "Doing Business, An Independent Evaluation : Taking the Measure of the World Bank-IFC Doing Business Indicators," World Bank Publications, The World Bank, number 6467, January.
    3. Hu, Fang & Leung, Sidney C.M., 2012. "Top management turnover, firm performance and government control: Evidence from China's listed state-owned enterprises," The International Journal of Accounting, Elsevier, vol. 47(2), pages 235-262.
    4. Tomasz Mickiewicz, 2009. "Hierarchy of governance institutions and the pecking order of privatisation: Central-Eastern Europe and Central Asia reconsidered," Post-Communist Economies, Taylor & Francis Journals, vol. 21(4), pages 399-423.
    5. Evžen Kočenda & Jan Hanousek, 2012. "State ownership and control in the Czech Republic," Economic Change and Restructuring, Springer, vol. 45(3), pages 157-191, August.
    6. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2001. "Competition and Enterprise Performance in Transition Economies: Evidence from a Cross-country Survey," William Davidson Institute Working Papers Series 376, William Davidson Institute at the University of Michigan.
    7. Frensch, Richard, 2004. "Public governance as the source of quality and variety gains from transition," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 388-408, September.
    8. Lai, Jung-Ho & Chang, Shao-Chi & Chen, Sheng-Syan, 2010. "Is experience valuable in international strategic alliances?," Journal of International Management, Elsevier, vol. 16(3), pages 247-261, September.
    9. Jessie Zhou & Mike Peng, 2012. "Does bribery help or hurt firm growth around the world?," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 907-921, December.
    10. Filippova, Irina, 2012. "Методологическая Концепция Анализа Социально-Экономических Систем
      [Methodological approach to the analysis of socio-economic systems]
      ," MPRA Paper 46767, University Library of Munich, Germany.
    11. Krug, B. & Hendrischke, H., 2006. "Institution Building and Change in China," ERIM Report Series Research in Management ERS-2006-008-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
    12. Jan Hanousek & Evžen Kočenda, 2011. "Extent of the Integrated State Ownership and Effect of the State Control on Performance of Czech Firms," Politická ekonomie, University of Economics, Prague, vol. 2011(1), pages 82-104.
    13. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2001. "Competition and Enterprise Performance in Transition Economies from a Cross-Country Survey," CERT Discussion Papers 0101, Centre for Economic Reform and Transformation, Heriot Watt University.
    14. Susan J. Linz, 2002. "Barriers to Investment by Russian Firms: Property Protection or Credit Constraints?," William Davidson Institute Working Papers Series 469, William Davidson Institute at the University of Michigan.
    15. Raiser, Martin, 2001. "Institutions, Social Norms and Economic Development: Platteau, J.-P. (Ed.), Harwood Academic Publishers, Amsterdam, 2000, 361 pp," Economic Systems, Elsevier, vol. 25(4), pages 405-408, December.
    16. Carlin, Wendy & Schaffer, Mark & Seabright, Paul, 2003. "Infrastructure, Competition and Innovation : New Survey Evidence from Transition," IDEI Working Papers 243, Institut d'Économie Industrielle (IDEI), Toulouse.

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