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Forbidden Payment: Foreign Bribery and American Business After 1977

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  • James R. Hines, Jr.

Abstract

The United States prohibits American individuals and corporations from bribing foreign government officials. Legislation enacted in 1976 and 1977 stipulates tax penalties, fines, and even prison terms for executives of American companies that pay illegal bribes. This paper examines the effect of US anti-bribery legislation on the operations of US firms in bribe-prone countries after 1977. Four separate indicators reveal that US business activities in these countries fell sharply after passage of the Foreign Corrupt Practices Act of 1977. These results suggest that this unilateral action by the United States served to weaken the competitive positions of American firms without significantly reducing the importance of bribery to foreign business transactions.

Suggested Citation

  • James R. Hines, Jr., 1995. "Forbidden Payment: Foreign Bribery and American Business After 1977," NBER Working Papers 5266, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5266
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    References listed on IDEAS

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    1. John L Graham, 1984. "The Foreign Corrupt Practices Act: A New Perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 15(3), pages 107-121, September.
    2. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
    3. Richard Baldwin & Paul Krugman, 1988. "Industrial Policy and International Competition in Wide-Bodied Jet Aircraft," NBER Chapters,in: Trade Policy Issues and Empirical Analysis, pages 45-78 National Bureau of Economic Research, Inc.
    4. James R. Hines & Eric M. Rice, 1994. "Fiscal Paradise: Foreign Tax Havens and American Business," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 149-182.
    5. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
    6. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    7. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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