Measuring governance, corruption, and State capture - how firms and bureaucrats shape the business environment in transition economies
AbstractAs a symptom of fundamental institutional weaknesses, corruption needs to be viewed within a broader governance framework. It thrives where the state is unable to reign over its bureaucracy, to protect property and contractual rights, or to provide institutions that support the rule off law. Furthermore, governance failures at the national level cannot be isolated from the interface between the corporate and state sectors, in particular from the heretofore under-emphasized influence that firms may exert on the state. Under certain conditions, corporate strategies may exacerbate mis-governance at the national level. An in-depth empirical assessment of the links between corporate behavior and national governance can thus provide particular insights. The 1999 Business Environment and Enterprise Performance Survey (BEEPS) - the transition economies component of the ongoing World Business Environment Survey - assesses in detail the various dimensions of governance from the perspective of about 3,000 firms in 20 countries. After introducing the survey framework and measurement approach, the authors present the survey results, focusing on governance, corruption, and state capture. By unbundling governance into its many dimensions, BEEPS permits an in-depth empirical assessment. The authors pay special attention to certain forms of grand corruption, notably state capture by parts of the corporate sector - that is, the propensity of firms to shape the underlying rules of the game by"purchasing"decrees, legislation, and influence at the central bank, which is found to be prevalent in a number of transition economies. The survey also measures other dimensions of grand corruption, including those associated with public procurement, and quantifies the more traditional ("prettier") forms of corruption. Cross-country surveys may suffer from bias if firms tend to systematically over- or underestimate the extent of problems within their country. The authors provide a new test of this potential bias, finding little evidence of country perception bias in BEEPS.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2312.
Date of creation: 30 Apr 2000
Date of revision:
Small Scale Enterprise; Decentralization; Corruption&Anitcorruption Law; Public Sector Corruption&Anticorruption Measures; Small and Medium Size Enterprises; National Governance; Governance Indicators; Corruption&Anitcorruption Law; Public Sector Corruption&Anticorruption Measures; Economic Policy; Institutions and Governance;
Other versions of this item:
- Joel S. Hellman & Geraint Jones & Daniel Kaufmann & Mark Schankerman, 2003. "Measuring Governance, Corruption and State Capture: How Firms and Bureaucrats Shape the Business Environment in Transition Economies," Development and Comp Systems 0308004, EconWPA.
- C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- P5 - Economic Systems - - Comparative Economic Systems
- M2 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
- Selowsky, Marcelo & Martin, Ricardo, 1997. "Policy Performance and Output Growth in the Transition Economies," American Economic Review, American Economic Association, vol. 87(2), pages 349-53, May.
- Shang-Jin Wei, 1999. "Corruption in economic development - beneficial grease, minor annoyance, or major obstacle?," Policy Research Working Paper Series 2048, The World Bank.
- Kaufmann, Daniel & Wei, Shang-Jin, 1999.
"Does 'Grease Money' Speed Up the Wheels of Commerce?,"
8209, University Library of Munich, Germany.
- Daniel Kaufmann & Shang-Jin Wei, 1999. "Does "Grease Money" Speed Up the Wheels of Commerce?," NBER Working Papers 7093, National Bureau of Economic Research, Inc.
- Daniel Kaufmann & Shang-Jin Wei, 2000. "Does 'Grease Money' Speed Up the Wheels of Commerce?," IMF Working Papers 00/64, International Monetary Fund.
- Kaufman, Daniel & Shang-Jin Wei, 1999. "Does"grease money"speed up the wheels of commerce?," Policy Research Working Paper Series 2254, The World Bank.
- Marin, Dalia & Kaufmann, Daniel & Gorochowskij, Bogdan, 2000.
"Barter in Transition Economies: Competing Explanations Confront Ukrainian Data,"
Discussion Papers in Economics
63, University of Munich, Department of Economics.
- Dalia Marin & Daniel Kaufmann & Bogdan Gorochowskij, 2000. "Barter in Transition Economies: Competing Explanations Confront Ukranian Data," William Davidson Institute Working Papers Series 287, William Davidson Institute at the University of Michigan.
- Gorochowskij, Bogdan & Kaufmann, Daniel & Marin, Dalia, 2000. "Barter In Transition Economies: Competing Explanations Confront Ukrainian Data," CEPR Discussion Papers 2432, C.E.P.R. Discussion Papers.
- Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
- J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
- Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
- Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank.
- Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
- Sachs, Jeffrey D, 1996. "The Transition at Mid Decade," American Economic Review, American Economic Association, vol. 86(2), pages 128-33, May.
- Erik Berglof & Patrick Bolton, 2002.
"The Great Divide and Beyond: Financial Architecture in Transition,"
Journal of Economic Perspectives,
American Economic Association, vol. 16(1), pages 77-100, Winter.
- Berglöf, Erik & Bolton, Patrick, 2003. "The Great Divide and Beyond - Financial Architecture in Transition," CEPR Discussion Papers 3476, C.E.P.R. Discussion Papers.
- Erik Berglof & Patrick Bolton, 2001. "The Great Divide and Beyond: Financial Architecture in Transition," William Davidson Institute Working Papers Series 414, William Davidson Institute at the University of Michigan.
- Buccirossi, Paolo & Spagnolo, Giancarlo, 2006.
"Leniency policies and illegal transactions,"
Journal of Public Economics,
Elsevier, vol. 90(6-7), pages 1281-1297, August.
- Buccirossi, Paolo & Spagnolo, Giancarlo, 2005. "Leniency Policies and Illegal Transactions," CEPR Discussion Papers 5442, C.E.P.R. Discussion Papers.
- Buccirossi, Paolo & Spagnolo, Giancarlo, 2005. "Leniency Policies and Illegal Transactions," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 74, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Scott Gehlbach, 2003. "Taxability and Government Support of Business Activity: Testing Theories of Social-Contract Failure," Working Papers w0028, Center for Economic and Financial Research (CEFIR).
- de Jong, Eelke & Bogmans, Christian, 2011. "Does corruption discourage international trade?," European Journal of Political Economy, Elsevier, vol. 27(2), pages 385-398, June.
- Irina Slinko & Evgeny Yakovlev & Ekaterina Zhuravskaya, 2003.
"Laws for Sale: Evidence from Russia,"
w0031, Center for Economic and Financial Research (CEFIR).
- Evgeny Yakovlev & Ekaterina Zhuravskaya, 2005.
"State Capture: From Yeltsin to Putin,"
w0052, Center for Economic and Financial Research (CEFIR).
- Traikova, Diana, 2013. "Determinants of non-farm entrepreneurial intentions in a transitional context: Evidence from rural Bulgaria," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 72, number 72.
- Amoros, Jose Ernesto, 2009. "Entrepreneurship and Quality of Institutions," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Francisco, Manuela & Pontara, Nicola, 2007. "Does corruption impact on firms'ability to conduct business in Mauritania ? evidence from investment climate survey data," Policy Research Working Paper Series 4439, The World Bank.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2005. "Governance matters IV : governance indicators for 1996-2004," Policy Research Working Paper Series 3630, The World Bank.
- Teuea Toatu, 2002. "Unravelling the Pacific Paradox," International and Development Economics Working Papers idec02-2, International and Development Economics.
- Geoffrey Wyatt, 2002. "Corruption, Productivity and Transition," CERT Discussion Papers 0205, Centre for Economic Reform and Transformation, Heriot Watt University.
- Bouton, Lawrence & Tiongson, Erwin R., 2010. "Subjective perceptions of financing constraints: How well do they reflect credit market conditions?," Emerging Markets Review, Elsevier, vol. 11(2), pages 98-105, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.