Do Firms In Post-Soviet Economies Suffer More From Corruption? A Comparison Of Post-Soviet And Other Developing Economies

The study examines the socio-economic challenges arising due to corruption in post-Soviet and other developing economies. We use the World Bank’s Business Environment and Enterprise Performance Survey (BEEPS). We use nonparametric tests to compare bribery in post-Soviet economies and other developing economies. Our results show that firms in post-Soviet countries have to deal with bribery more frequently when compared to firms in other developing economies. This finding holds for all three groups of firms, namely core industry firms, manufacturing firms, and service firms. Then, we differentiate between bribery in different areas which include customs/imports, courts, and taxes. When we compare firms in post-Soviet countries with firms in other developing countries, we find that all types of bribery are more common in post-Soviet countries. This finding holds for core industry firms, manufacturing firms, and service firms. The only exception is the result for service firms in bribery related to courts. For service firms, the frequency of bribery related to courts is not significantly different across post-Soviet and other countries. We conclude that the old habit of using bribery to do business in post-Soviet countries continues. Since corruption harms the economy, we urge policymakers in these countries to take stronger action to combat it.