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Bureaucratic competition and public corruption: Evidence from transition countries

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  • Diaby, Aboubacar
  • Sylwester, Kevin

Abstract

Some past theoretical models have predicted that bribes paid by firms to government officials are greater under a decentralized bureaucracy where a firm faces numerous officials. A “tragedy of the commons” arises where officials set bribe payments too high and so drive firms out of the industry. Other models predict the opposite as numerous officials in a decentralized bureaucracy bid down bribe payments. Using the Business Environment and Enterprise Performance Survey from the World Bank, a firm level survey covering 24 former communist countries and Turkey, we examine whether reported bribe payments by firms are higher when firms face potentially numerous demands for bribes. We find that bribe payments are higher under a more decentralized bureaucratic structure. This finding is robust across different purposes for which bribes are used but particularly strong for firms that use bribes in dealing with taxes and customs. Results are also robust across different bribe environments.

Suggested Citation

  • Diaby, Aboubacar & Sylwester, Kevin, 2014. "Bureaucratic competition and public corruption: Evidence from transition countries," European Journal of Political Economy, Elsevier, vol. 35(C), pages 75-87.
  • Handle: RePEc:eee:poleco:v:35:y:2014:i:c:p:75-87
    DOI: 10.1016/j.ejpoleco.2014.04.002
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    Citations

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    Cited by:

    1. André Seidel, 2015. "Compliance Costs, Corruption and the Differentiation of Bureaucratic Services," CESifo Working Paper Series 5683, CESifo Group Munich.
    2. Maria Kravtsova & Aleksey Oshchepkov, 2019. "Market And Network Corruption," HSE Working papers WP BRP 209/EC/2019, National Research University Higher School of Economics.
    3. repec:eee:telpol:v:41:y:2017:i:7:p:662-669 is not listed on IDEAS
    4. repec:voj:journl:v:63:y:2016:i:3:p:259-271 is not listed on IDEAS
    5. d'Agostino, G. & Dunne, J.P. & Pieroni, L., 2016. "Corruption and growth in Africa," European Journal of Political Economy, Elsevier, vol. 43(C), pages 71-88.
    6. repec:eee:wdevel:v:105:y:2018:i:c:p:171-188 is not listed on IDEAS
    7. Zakharov, Nikita, 2019. "Does corruption hinder investment? Evidence from Russian regions," European Journal of Political Economy, Elsevier, vol. 56(C), pages 39-61.
    8. Bhattacharyya, Sambit & Hodler, Roland, 2015. "Media freedom and democracy in the fight against corruption," European Journal of Political Economy, Elsevier, vol. 39(C), pages 13-24.
    9. repec:spr:soinre:v:140:y:2018:i:3:d:10.1007_s11205-017-1802-2 is not listed on IDEAS
    10. Demirbag, Mehmet & McGuinnness, Martina & Wood, Geoffrey & Bayyurt, Nizamettin, 2015. "Context, law and reinvestment decisions: Why the transitional periphery differs from other post-state socialist economies," International Business Review, Elsevier, vol. 24(6), pages 955-965.
    11. Hanousek, Jan & Kochanova, Anna, 2016. "Bribery environments and firm performance: Evidence from CEE countries," European Journal of Political Economy, Elsevier, vol. 43(C), pages 14-28.

    More about this item

    Keywords

    Corruption; Bureaucracy; Centralization;

    JEL classification:

    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • H1 - Public Economics - - Structure and Scope of Government

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