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State Ownership and Corruption

  • Billon, Steve
  • Gillanders, Robert

Using data from the World Bank's Enterprise Surveys, we test two interesting results that emerge from the theoretical model presented in Shleifer and Vishny (1994) that studies bargaining between politicians and managers of state-owned firms. Shleifer and Vishny's model suggests that firms with more state ownership should tend to pay less in bribes but not have a different experience of costly obstacles imposed on them by politicians. In our full sample, the results suggest that a one percent increase in state ownership is associated with a $125 reduction in the total annual informal payment of the firm and with a 0.5% decrease in the probability that a firm will consider corruption to be an obstacle to their current operations. We refine these average relationships somewhat by splitting the sample by global region. Only in our Europe and Central Asia sample do we find strong evidence in support of the first result and in this sample we find a signifcant effect of state ownership on obstacles. In our Sub-Saharan Africa and Latin America and Caribbean samples we do not find a significant effect on either corruption outcome.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 55600.

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Date of creation: Apr 2014
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Handle: RePEc:pra:mprapa:55600
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  1. Fan, C. Simon & Lin, Chen & Treisman, Daniel, 2009. "Political decentralization and corruption: Evidence from around the world," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 14-34, February.
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  17. Michael Breen & Robert Gillanders, 2011. "Corruption, Institutions and Regulation," Working Papers 201106, School of Economics, University College Dublin.
  18. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
  19. Shang-Jin Wei, 2000. "Local Corruption and Global Capital Flows," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 303-354.
  20. Eckel, Catherine & Eckel, Doug & Singal, Vijay, 1997. "Privatization and efficiency: Industry effects of the sale of British Airways," Journal of Financial Economics, Elsevier, vol. 43(2), pages 275-298, February.
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  23. Birdsall, Nancy & Nellis, John, 2003. "Winners and Losers: Assessing the Distributional Impact of Privatization," World Development, Elsevier, vol. 31(10), pages 1617-1633, October.
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