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Corruption as an Obstacle for Doing Business in the Western Balkans: A Business Sector Perspective

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  • Jelena Budak

    ()
    (The Institute of Economics, Zagreb)

  • Edo Rajh

    ()
    (The Institute of Economics, Zagreb)

Abstract

This paper investigates business people’s perceptions of corruption as an obstacle for doing business and their attitudes towards corruption. It is based on a survey conducted on the sample of over 1800 business owners and managers in the Western Balkans region. Using the original survey data collected in 2010 for seven countries – Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Montenegro and Serbia – the paper explores business people’s views on the ways in which the business sector is dealing with corruption as well as on the perceived role of private and government agents in curbing corruption. The factor analysis produced three distinct factors: (1) Understanding corruption as “grease in the wheels”; (2) Individual action can contribute to the curbing of corruption; (3) Corruption is a government-related issue. The main research question was whether the respondents’ attitudes towards corruption are related to the following variables: country of origin, their own corruption experience, perceptions of corruption as an obstacle for doing business and the general corruption prevalence trends. The results of the analysis of variance show that the country of origin strongly determines business people’s attitudes on corruption. Respondents with corruption experience tend to justify corruption as “grease in the wheels” more than “clean” respondents. Business people who believe that corruption is on the rise or that it poses a big obstacle for their business put greater emphasis on the government dealing with the issue of corruption than on individual or private anti-corruption initiatives. The findings provide useful policy recommendations for countries in the Western Balkans region to design a more entrepreneurship-friendly environment.

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Bibliographic Info

Paper provided by The Institute of Economics, Zagreb in its series Working Papers with number 1104.

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Length: 24 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:iez:wpaper:1104

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Keywords: corruption; business sector; attitudes and perceptions; corruption experience; Western Balkans;

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References

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  1. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
  2. Shang-Jin Wei, 1999. "Does corruption relieve foreign investors of the burden of taxes and capital controls?," Policy Research Working Paper Series 2209, The World Bank.
  3. Daniel Kaufmann & Shang-Jin Wei, 2000. "Does 'Grease Money' Speed Up the Wheels of Commerce?," IMF Working Papers 00/64, International Monetary Fund.
  4. Pierre-Guillaume Méon & Khalid Sekkat, 2005. "Does corruption grease or sand the wheels of growth?," ULB Institutional Repository 2013/7364, ULB -- Universite Libre de Bruxelles.
  5. Axel Dreher & Martin Gassebner, 2007. "Greasing the wheels of entrepreneurship? The impact of regulations and corruption on firm entry," KOF Working papers 07-166, KOF Swiss Economic Institute, ETH Zurich.
  6. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
  7. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
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