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Corruption and the shadow economy at the regional level

Author

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  • Robert Gillanders
  • Sinikka Parviainen

Abstract

The links between corruption and the shadow economy have mostly been studied empirically at the country level. This paper contributes to this literature by examining the relationship at the sub‐national level. We also add value to the existing literature in that we employ data capturing the extent to which the shadow economy and corruption are viewed as problems by firms as opposed to the standard measures of corruption and the size of the shadow economy. Using World Bank Enterprise Survey data, we find that sub‐national units in which more firms report that corruption is an obstacle to their operations also tend to have more firms that report that the practices of informal competitors are an obstacle and vice versa. Sub‐Saharan Africa is different in that neither of these findings is evident in that sub‐sample.

Suggested Citation

  • Robert Gillanders & Sinikka Parviainen, 2018. "Corruption and the shadow economy at the regional level," Review of Development Economics, Wiley Blackwell, vol. 22(4), pages 1729-1743, November.
    • Handle: RePEc:bla:rdevec:v:22:y:2018:i:4:p:1729-1743
    DOI: 10.1111/rode.12517
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    Cited by:

    1. Salvatore Capasso & Rajeev K. Goel & James W. Saunoris, 2023. "The nexus between corruption and academic freedom: An international investigation of the underlying linkages," Contemporary Economic Policy, Western Economic Association International, vol. 41(3), pages 513-531, July.
    2. Aziz N. Berdiev & Rajeev K. Goel & James W. Saunoris, 2024. "Informal employment and corruption: Differences across gender and industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2066-2086, June.
    3. Selçuk Akçay & Emre Karabulutoğlu, 2021. "Do remittances moderate financial development–informality nexus in North Africa?," African Development Review, African Development Bank, vol. 33(1), pages 166-179, March.
    4. Cummins, Mark & Gillanders, Robert, 2020. "Greasing the Turbines? Corruption and access to electricity in Africa," Energy Policy, Elsevier, vol. 137(C).
    5. Nahid Sultana & Mohammad Mafizur Rahman & Rasheda Khanam, 2022. "Informal Sector Employment and Economic Growth: Evidence from Developing Countries in SDG Perspective," Sustainability, MDPI, vol. 14(19), pages 1-19, September.
    6. Michael Breen & Robert Gillanders, 2020. "Press Freedom and Corruption Perceptions: Is There a Reputational Premium?," Politics and Governance, Cogitatio Press, vol. 8(2), pages 103-115.
    7. Michael Breen & Robert Gillanders, 2020. "Press Freedom and Corruption Perceptions: Is There a Reputational Premium?," Politics and Governance, Cogitatio Press, vol. 8(2), pages 103-115.
    8. Dagmara Nikulin & Ewa Lechman, 2021. "Shadow Economy in Poland: Results of the Survey," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 49-65, Springer.
    9. Tchablemane YENLIDE & Mawussé Komlagan Nézan OKEY, 2022. "Corruption et accès à l’électricité dans les pays de l’Afrique subsaharienne," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 23-37.
    10. Lv, Zhike, 2020. "Does tourism affect the informal sector?," Annals of Tourism Research, Elsevier, vol. 80(C).
    11. Canh Phuc Nguyen & Binh Quang Nguyen, 2023. "Does the shadow economy matter for tourism consumption? New global evidence," Empirical Economics, Springer, vol. 65(2), pages 729-773, August.
    12. Ritwik Banerjee & Amadou Boly & Robert Gillanders, 2022. "Is corruption distasteful or just another cost of doing business?," Public Choice, Springer, vol. 190(1), pages 33-51, January.

    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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