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Measuring Governance, Corruption and State Capture: How Firms and Bureaucrats Shape the Business Environment in Transition Economies

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Author Info
Joel S. Hellman (The World Bank)
Geraint Jones (MIT)
Daniel Kaufmann (The World Bank)
Mark Schankerman (London School of Economics; Centre for Economic Policy Research)

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Abstract

Recent studies have focussed on the characteristics and policies of the state to explain the extent and causes of corruption, with little attention paid to the role played by firms. Consequently, the links between corporate governance and national governance have been unexplored. This paper summarises the results of the Business Environment and Enterprise Performance Survey (BEEPS) across 20 transition economies, providing an assessment of governance and corruption from the perspective of firms. The BEEPS is part of the global World Business Environment Survey being carried out by the World Bank. The survey design permits an in-depth empirical analysis of governance and corruption, unbundling governance into its component dimensions. This allows a more detailed quantitative assessment of corruption, a more nuanced understanding of the causes of the problem and as a result a stronger foundation for policy advice. Particular attention is paid to 'state capture' by parts of the corporate sector (i.e. the propensity of firms to shape the underlying 'rules of the game' including 'purchase' of legislation and court decisions). The survey also provides measures of other dimensions of 'grand corruption', such as that related to public procurement. Typically, cross-country surveys suffer from a potential bias if firms have a tendency to systematically over- or under-estimate the extent of problems in their own country. We implement a simple method for evaluating the extent of this 'country perception bias' and find little evidence pointing to such bias in the BEEPS.

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Publisher Info
Paper provided by EconWPA in its series Development and Comp Systems with number 0308004.

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Length: 47 pages
Date of creation: 27 Aug 2003
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Handle: RePEc:wpa:wuwpdc:0308004

Note: Type of Document - Acrobat PDF; pages: 47
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Web page: http://129.3.20.41

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Related research
Keywords: Governance; corruption; state capture; transition economies;

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Find related papers by JEL classification:
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 - - - Microeconomic Data
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
H4 - Public Economics - - Publicly Provided Goods
K2 - Law and Economics - - Regulation and Business Law

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References listed on IDEAS
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.:
  1. Sachs, Jeffrey D, 1996. "The Transition at Mid Decade," American Economic Review, American Economic Association, vol. 86(2), pages 128-33, May. [Downloadable!] (restricted)
  2. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
    Other versions:
  4. J. Stiglitz, . "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki".
  5. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August. [Downloadable!] (restricted)
  6. 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(1997-2), pages 159-240. [Downloadable!]
  7. 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. [Downloadable!] (restricted)
  8. 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 Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  9. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank. [Downloadable!]
  10. Pranab K. Bardhan & Dilip Mookherjee, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May. [Downloadable!] (restricted)
  11. Shang-Jin Wei, 1999. "Corruption in economic development - beneficial grease, minor annoyance, or major obstacle?," Policy Research Working Paper Series 2048, The World Bank. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Amoros, Jose Ernesto, 2009. "Entrepreneurship and Quality of Institutions," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  2. Evgeny Yakovlev & Ekaterina Zhuravskaya, 2006. "State Capture: From Yeltsin to Putin," Working Papers w0094, Center for Economic and Financial Research (CEFIR). [Downloadable!]
    Other versions:
  3. Irina Slinko & Evgeny Yakovlev & Ekaterina Zhuravskaya, 2004. "Laws for Sale: Evidence from Russia," Economics Working Papers 0046, Institute for Advanced Study, School of Social Science. [Downloadable!]
    Other versions:
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