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Does corruption impact on firms'ability to conduct business in Mauritania ? evidence from investment climate survey data

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  • Francisco, Manuela
  • Pontara, Nicola

Abstract

This paper seeks to understand whether Mauritanian firms deem corruption as an obstacle to operate and grow, to identify the profile of firms that are more likely to make informal payments, and to quantify the size of these payments. The results of the analysis show that perceptions of corruption can be potentially misleading. Corruption is not considered to be one of the most taxing factors impeding the growth of firms in Mauritania. Yet, its cost to firms is significant and greater than in the comparator group countries. This means that corruption is internalized by firms and considered an accepted practice. Alternatively, firms may fear reporting corruption practices for fear of retaliation. Econometric evidence on the propensity and intensity of bribes suggests that medium-size firms suffer the most from corruption in Mauritania. Larger firms are more established and connected, do not fear exiting the market, and are less likely to be harassed. Smaller firms are less visible and may be able to escape the control of public officials by operating largely in the informal sector. Medium-size firms are the most likely to pay bribes and to pay the highest amounts as a percentage of their total annual sales, which places a heavy burden on their ability to grow.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4439.

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Date of creation: 01 Dec 2007
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Handle: RePEc:wbk:wbrwps:4439

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Keywords: Public Sector Corruption&Anticorruption Measures; Access to Finance; Governance Indicators; Microfinance; National Governance;

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References

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  1. Hellman, Joel S. & Jones, Geraint & Kaufmann, daniel, 2000. ""Seize the state, seize the day": state capture, corruption, and influence in transition," Policy Research Working Paper Series 2444, The World Bank.
  2. Kaufmann, Daniel & Wei, Shang-Jin, 1999. "Does 'Grease Money' Speed Up the Wheels of Commerce?," MPRA Paper 8209, University Library of Munich, Germany.
  3. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1999. "Corruption, public finances, and the unofficial economy," Policy Research Working Paper Series 2169, The World Bank.
  4. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2005. "Governance matters IV : governance indicators for 1996-2004," Policy Research Working Paper Series 3630, The World Bank.
  5. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  6. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
  7. Hellman, Joel S. & Jones, Geraint & Kaufmann, Daniel & Schankerman, Mark, 2000. "Measuring governance, corruption, and State capture - how firms and bureaucrats shape the business environment in transition economies," Policy Research Working Paper Series 2312, The World Bank.
  8. Acemoglu, D. & Verdier, T., 1996. "Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach," DELTA Working Papers 96-12, DELTA (Ecole normale supérieure).
  9. Alejandro Gaviria Uribe, 2002. "Assessing the Effects of Corruption and Crime on Firm. Performance: Evidence from Latin America," INFORMES DE INVESTIGACIÓN 002031, FEDESARROLLO.
  10. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-23, October.
  11. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
  12. Alberto Ades & Rafael Di Tella, 1997. "The New Economics of Corruption: a Survey and Some New Results," Political Studies, Political Studies Association, vol. 45(3), pages 496-515.
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Cited by:
  1. Antonio Estache & A. Iimi, 2008. "Procurement Efficiency for Infrastructure Development and Financial Needs Reassessed," Working Papers ECARES 2008_022, ULB -- Universite Libre de Bruxelles.
  2. Seker, Murat & Yang, Judy S., 2012. "How bribery distorts firm growth : differences by firm attributes," Policy Research Working Paper Series 6046, The World Bank.
  3. Léonce Ndikumana, 2013. "The Private Sector as Culprit and Victim of Corruption in Africa," Working Papers wp330, Political Economy Research Institute, University of Massachusetts at Amherst.
  4. Magnoli Bocchi, Alessandro & Pontara, Nicola & Fall, Khayar & Tejada, Catalina M. & Cuervo, Pablo Gallego, 2008. "Reaching the millennium development goals : Mauritania should care," Policy Research Working Paper Series 4674, The World Bank.

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