Between two evils: Investors prefer grand corruption!
AbstractRecent empirical studies claim that, in addition to levels of corruption, investors are deterred by its unpredictability. I claim instead that it is petty corruption that deters investors. I employ seven subcomponents of corruption for a sample of 102 countries that appear in the 2003 Global Competitiveness Report of the WEF. The second principal component of this data depicts a grand, political type, embracing corruption in government policymaking and in judicial decisions as opposed to corruption in public utilities and loan applications. Grand corruption less deters investors because they might feel belonging to an inner circle of insiders that can profit from hidden arrangements. Grand corruption also entails relatively smaller organizational effort. --
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Bibliographic InfoPaper provided by University of Passau, Faculty of Business and Economics in its series Passauer Diskussionspapiere, Volkswirtschaftliche Reihe with number V-31-05.
Date of creation: 2005
Date of revision:
Grand Corruption; Petty Corruption; Extortion; Predictability; Opportunism; Public Utilities; Laws and Policies; Judiciary;
Find related papers by JEL classification:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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