IDEAS home Printed from https://ideas.repec.org/p/ags/aaea01/20495.html
   My bibliography  Save this paper

The Differential Impact Of Corruption On Microenterprises In Russia

Author

Listed:
  • Safavian, Mehnaz S.
  • Sheldon, Ian M.
  • Graham, Douglas H.
  • Gonzalez-Vega, Claudio

Abstract

Over the past decade, the repressive legal and regulatory environment in transition economies has received considerable attention in the literature. In Russia, this framework has resulted in an environment in which rules and regulations govern almost all aspects of economic activity. The elaborate system of regulations with which firms must comply, in combination with a lack of accountability for regulatory enforcers, has created a corrupt cadre of government officials who frequently engage in rent-seeking behavior while monitoring and enforcing firm compliance. The objective of this paper is to investigate the manner in which corruption affects micro and small enterprises in Russia. Empirical evidence suggests that micro and small enterprises vary substantially in reporting how problematic corruption is for their enterprise. A theoretical model explores why extortion from regulators may occur in a non-uniform manner across firms. The theoretical model postulates that government regulators customize the nature of their rent-seeking activities towards, similar to a price-discriminating monopolist facing hidden information. The model shows that production technologies, input choices, and other firm characteristics such as location play a role in determining the bribe price that a regulator will charge a firm, as well as the number of times he will return to collect it. Supportive evidence comes from survey data collected on Russian microenterprises. The model described above is tested using econometrics, and numerical simulations.

Suggested Citation

  • Safavian, Mehnaz S. & Sheldon, Ian M. & Graham, Douglas H. & Gonzalez-Vega, Claudio, 2001. "The Differential Impact Of Corruption On Microenterprises In Russia," 2001 Annual meeting, August 5-8, Chicago, IL 20495, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea01:20495
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/20495
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    2. Sanjeev Gupta, 1998. "Does Corruption Affect Income Inequality and Poverty?," IMF Working Papers 98/76, International Monetary Fund.
    3. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-1023, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Weill, Laurent, 2011. "How corruption affects bank lending in Russia," Economic Systems, Elsevier, vol. 35(2), pages 230-243, June.
    2. Ozlem KUTLU FURTUNA, 2016. "The Nexus between Discretionary Expenditures and Corruption: Industry Level Perspectives from BRIC and Turkey," Proceedings of Business and Management Conferences 4406932, International Institute of Social and Economic Sciences.
    3. Fungáčová, Zuzana & Kochanova, Anna & Weill, Laurent, 2015. "Does Money Buy Credit? Firm-Level Evidence on Bribery and Bank Debt," World Development, Elsevier, vol. 68(C), pages 308-322.
    4. Ahlin, Christian & Pang, Jiaren, 2008. "Are financial development and corruption control substitutes in promoting growth?," Journal of Development Economics, Elsevier, vol. 86(2), pages 414-433, June.
    5. Belousova, Veronika & Rajeev, K. Goel & Korhonen, Iikka, 2011. "Causes of Corruption in Russia: A Disaggregated Analysis," Discussion Paper Series 557, Institute of Economic Research, Hitotsubashi University.
    6. Pieroni, L. & d'Agostino, G., 2013. "Corruption and the effects of economic freedom," European Journal of Political Economy, Elsevier, vol. 29(C), pages 54-72.
    7. Alexander Libman & Janis N. Kluge, 2017. "Sticks or Carrots? Comparing Effectiveness of Government Shadow Economy Policies in Russia," Working Papers 364, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    8. Krisztina Kis-Katos & Günther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(1), pages 79-109, May.
    9. Diaby, Aboubacar & Sylwester, Kevin, 2015. "Corruption and Market Competition: Evidence from Post-Communist Countries," World Development, Elsevier, vol. 66(C), pages 487-499.

    More about this item

    Keywords

    Political Economy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea01:20495. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.