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Does corruption cause encumbered business regulations? An IV approach

Author

Listed:
  • Hugo J. Far𨀍
  • Hugo M. Montesinos-Yufa
  • Daniel R. Morales
  • C鳡r G. Aviles B.
  • Osmel Brito-Bigott

Abstract

In this research we attempt to understand the effects of corruption on business regulations measured by number of procedures, time and costs involved in satisfying governmental requisites. Using Two-Stage-Least Squares (2SLS) methods we lessen the problems associated with endogeneity and uncovered the existence of a robust, positive, statistically significant and quantitatively large direction channel from corruption to encumbered business regulations. These results suggest the need to deter corruption in order to improve business regulations. The quest to reduce corruption worldwide acquires new relevancy given the findings of Djankov et al . (2006) that countries with simple and transparent regulations grow faster.

Suggested Citation

  • Hugo J. Far𨀍 & Hugo M. Montesinos-Yufa & Daniel R. Morales & C鳡r G. Aviles B. & Osmel Brito-Bigott, 2013. "Does corruption cause encumbered business regulations? An IV approach," Applied Economics, Taylor & Francis Journals, vol. 45(1), pages 65-83, January.
    • Handle: RePEc:taf:applec:45:y:2013:i:1:p:65-83
    DOI: 10.1080/00036846.2011.589814
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    1. Donald W.K. Andrews & James H. Stock, 2005. "Inference with Weak Instruments," Cowles Foundation Discussion Papers 1530, Cowles Foundation for Research in Economics, Yale University.
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    3. Mr. Carlos A Leite & Jens Weidmann, 1999. "Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth," IMF Working Papers 1999/085, International Monetary Fund.
    4. Mr. Paolo Mauro, 1996. "The Effects of Corruptionon Growth, Investment, and Government Expenditure," IMF Working Papers 1996/098, International Monetary Fund.
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    Cited by:

    1. Yakira Fernández-Torres & Milagros Gutiérrez-Fernández & Julián Ramajo-Hernández, 2018. "Business Regulation And Economic Growth: The Indirect Effect Of Corruption In Latin America And The Caribbean," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-22, March.

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