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The incidence of graft on developing-country firms

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Author Info

  • Gonzalez, Alvaro
  • Ernesto Lopez-Cordova, J.
  • E. Valladares, Elio

Abstract

This paper measures the extent to which firms in developing countries are the target of bribes. Using new firm-level survey data from 33 African and Latin American countries, we first show that perceptions adjust slowly tofirms'experience with corrupt officials and hence are an imperfect proxy for the true incidence of graft. We then construct an experience-based index that reflects the probability that a firm will be asked for a bribe in order to complete a specified set of business transactions. On average, African firms are three times as likely to be asked for bribes as are firms in Latin America, although there is substantial variation within each region. Last, we show that graft appears to be more prevalent in countries with excessive regulation and where democracy is weak. In particular, our results suggest that the incidence of graft in Africa would fall by approximately 85 percent if countries in the region had levels of democracy and regulation similar to those that exist in Latin America.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4394.

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Date of creation: 01 Nov 2007
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Handle: RePEc:wbk:wbrwps:4394

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Related research

Keywords: Public Sector Corruption&Anticorruption Measures; Corruption&Anitcorruption Law; Crime and Society; E-Business; Access to Finance;

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Cited by:
  1. Hallward-Driemeier, Mary & Khun-Jush, Gita & Pritchett, Lant, 2010. "Deals versus rules : policy implementation uncertainty and why firms hate it," Policy Research Working Paper Series 5321, The World Bank.
  2. Clarke, George R.G., 2011. "How Petty is Petty Corruption? Evidence from Firm Surveys in Africa," World Development, Elsevier, vol. 39(7), pages 1122-1132, July.
  3. Clarke, George R.G., 2011. "Firm Registration and Bribes: Results from a Microenterprise Survey in Africa," MPRA Paper 31857, University Library of Munich, Germany.
  4. Anos-Casero, Paloma & Udomsaph, Charles, 2009. "What drives firm productivity growth ?," Policy Research Working Paper Series 4841, The World Bank.

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