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Business Regulation And Economic Growth: The Indirect Effect Of Corruption In Latin America And The Caribbean

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  • YAKIRA FERNÁNDEZ-TORRES

    (Faculty of Business, Finance and Tourism, University of Extremadura, University Avenue, Cáceres 10071, Spain)

  • MILAGROS GUTIÉRREZ-FERNÁNDEZ

    (Faculty of Business, Finance and Tourism, University of Extremadura, University Avenue, Cáceres 10071, Spain)

  • JULIÁN RAMAJO-HERNÁNDEZ

    (Faculty of Economics, University of Extremadura, Elvas Avenue, Badajoz 06071, Spain)

Abstract

This paper explores how corruption indirectly affects economic growth through business regulation in Latin America and the Caribbean, a relationship that has scarcely been addressed in the literature. Although regulation of the private sector explains GDP per capita, the effect is conditioned by the level of corruption. When the control of corruption is greater, there is an increase in the extent to which bureaucracy when starting a business and trading across borders negatively affects GDP per capita in Latin America and the Caribbean. This finding corroborates the “greasing the wheels” hypothesis.

Suggested Citation

  • 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.
  • Handle: RePEc:wsi:jdexxx:v:23:y:2018:i:01:n:s1084946718500036
    DOI: 10.1142/S1084946718500036
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