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Corruption and Firm Growth: Evidence from around the World

Author

Listed:
  • Raymond Fisman

    (Boston University (BU))

  • Sergei Guriev

    (Département d'économie)

  • Carolin Ioramashvili

    (London School of Economics and Political Science (LSE))

  • Alexander Plekhanov

    (European Bank for Reconstruction and Development)

Abstract

We empirically investigate the relationship between corruption and growth using a firm-level data set that is unique in scale, covering almost 88,000 firms across 141 economies in 2006-2020, with wide-ranging corruption experiences. The scale and detail of our data allow us to explore the corruption-growth relationship at a very local level, within industries in a relatively narrow geography. We report three empirical regularities. First, firms that make zero informal payments tend to grow slower than bribers. Second, this result is driven by non-bribers in high-corruption countries. Third, among bribers growth is decreasing in the amount of informal payments in both high- and low-corruption countries. We suggest that this set of results may be reconciled with a simple model in which endogenously determined higher bribe rates lead to lower growth, while non-bribers are often excluded entirely from growth opportunities in high-corruption settings.

Suggested Citation

  • Raymond Fisman & Sergei Guriev & Carolin Ioramashvili & Alexander Plekhanov, 2021. "Corruption and Firm Growth: Evidence from around the World," Sciences Po publications 2021-05, Sciences Po.
    • Handle: RePEc:spo:wpmain:info:hdl:2441/4sjhnqr68e9b1ov9t31v464u3k
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    Keywords

    Corruption; Firm growth; Enterprise surveys;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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