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Firm-Level Corruption in Vietnam

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Author Info

  • Rand, John
  • Tarp, Finn

Abstract

This paper uses a unique panel dataset on firm-level corruption. It contains quantitative information on bribe payments by a sample of formal and informal Vietnamese firms. We show that bribe incidence is highly associated with firm-level differences in (i) visibility, (ii) sunk costs, (iii) ability to pay, and (iv) level of interaction with public officials. Moreover, when informal firms become formal the probability of paying bribes increases. Becoming formal is also associated with a revenue growth premium that is not driven by self-selection of well-performing firms. On average, this premium outweighs the additional bribe cost of formalization. Formalization embodies net benefits in spite of the growth hampering effects of bribes.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2010/wp2010-16.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Papers with number UNU-WIDER Working Paper WP2010/16.

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Length: 23 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:unu:wpaper:wp2010-16

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Keywords: firm performance; corruption; Vietnam;

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References

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  1. Svensson, Jakob, 2002. "Who Must Pay Bribes and How Much? Evidence from a cross-section of firms," Seminar Papers 713, Stockholm University, Institute for International Economic Studies.
  2. Binh Nguyen & James Albrecht & Susan Vroman & Daniel Westbrook, 2003. "A Quantile Regression Decomposition of Urban-Rural Inequality in Vietnam," Working Papers gueconwpa~03-03-31, Georgetown University, Department of Economics.
  3. McKenzie, David & Sakho, Yaye Seynabou, 2007. "Does It Pay Firms to Register for Taxes? The Impact of Formality on Firm Profitability," IZA Discussion Papers 3179, Institute for the Study of Labor (IZA).
  4. Shleifer, Andrei & Vishny, Robert W, 1994. "Politicians and Firms," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 995-1025, November.
  5. Fisman, Raymond & Svensson, Jakob, 2000. "Are corruption and taxation really harmful to growth? - firm-level evidence," Policy Research Working Paper Series 2485, The World Bank.
  6. Gabriela Inchauste & Mark Gradstein & Era Dabla-Norris, 2005. "What Causes Firms to Hide Output? The Determinants of Informality," IMF Working Papers 05/160, International Monetary Fund.
  7. Clarke, George R. G. & Xu, Lixin Colin, 2004. "Privatization, competition, and corruption: how characteristics of bribe takers and payers affect bribes to utilities," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2067-2097, August.
  8. Henrik Hansen & John Rand & Finn Tarp, 2009. "Enterprise Growth and Survival in Vietnam: Does Government Support Matter?," The Journal of Development Studies, Taylor and Francis Journals, vol. 45(7), pages 1048-1069.
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Cited by:
  1. O.Toole, Conor M. & Tarp, Finn, 2012. "Corruption and the Efficiency of Capital Investment in Developing Countries," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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