IDEAS home Printed from https://ideas.repec.org/p/uta/papers/2013_10.html
   My bibliography  Save this paper

A Dynamic Managerial Theory of Corruption and Productivity Among Firms in Developing Countries

Author

Listed:
  • James P. Gander

Abstract

In this paper, a simple dynamic model of efficient firm-level managerial resource allocation to two uses, one involving productivity activities and another one involving corruption activities to get things done was developed. The model follows the optimal control theory process. Two operational equations are derived representing firm growth and shadow-price behavior. Firm-level interview data on surrogates for the firms inputs was used for domestically owned firms in developing economies covering two time periods. The SUR method was used to estimate jointly the two equations. Overall, the model fit the data quite well. It was found that the managerial surrogates; namely, capacity utilization, formal worker training, and the time spent dealing with government regulations, were positive and significant predictors of firm output growth and the shadow-price of its capital with a few negative exceptions. Implicitly, there appears to be a trade-off between managerial resources used for growth and those used for the shadow price. Policy implications were discussed briefly.

Suggested Citation

  • James P. Gander, 2013. "A Dynamic Managerial Theory of Corruption and Productivity Among Firms in Developing Countries," Working Paper Series, Department of Economics, University of Utah 2013_10, University of Utah, Department of Economics.
    • Handle: RePEc:uta:papers:2013_10
    as

    Download full text from publisher

    File URL: http://economics.utah.edu/research/publications/2013_10.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kaufman, Daniel & Shang-Jin Wei, 1999. "Does"grease money"speed up the wheels of commerce?," Policy Research Working Paper Series 2254, The World Bank.
    2. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
    3. Oecd & Nea, 2010. "Case Law," Nuclear Law Bulletin, OECD Publishing, vol. 2010(1), pages 93-102.
    4. James P. Gander, 2010. "The managerial limit to the growth of Firms revisited," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(8), pages 549-555, December.
    5. Oecd & Nea, 2011. "Case Law," Nuclear Law Bulletin, OECD Publishing, vol. 2010(2), pages 67-73.
    6. Toke S. Aidt, 2003. "Economic analysis of corruption: a survey," Economic Journal, Royal Economic Society, vol. 113(491), pages 632-652, November.
    7. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    8. Lambsdorff,Johann Graf, 2007. "The Institutional Economics of Corruption and Reform," Cambridge Books, Cambridge University Press, number 9780521872751.
    9. Reinikka, Ritva & Svensson, Jakob, 2006. "Using Micro-Surveys to Measure and Explain Corruption," World Development, Elsevier, vol. 34(2), pages 359-370, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrew Hodge & Sriram Shankar & D. S. Prasada Rao & Alan Duhs, 2011. "Exploring the Links Between Corruption and Growth," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 474-490, August.
    2. Kenny, Charles & Soreide, Tina, 2008. "Grand Corruption in Utilities," Policy Research Working Paper Series 4805, The World Bank.
    3. Dzhumashev, Ratbek, 2014. "Corruption and growth: The role of governance, public spending, and economic development," Economic Modelling, Elsevier, vol. 37(C), pages 202-215.
    4. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2009. "How do institutions affect corruption and the shadow economy?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(6), pages 773-796, December.
    5. Ruba Abdullah Aljarallah, 2020. "The Economic Impacts of Natural Resource Dependency in Gulf Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 36-52.
    6. Eugen Dimant & Guglielmo Tosato, 2018. "Causes And Effects Of Corruption: What Has Past Decade'S Empirical Research Taught Us? A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 335-356, April.
    7. Dreher, Axel & Kotsogiannis, Christos & McCorriston, Steve, 2007. "Corruption around the world: Evidence from a structural model," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 443-466, September.
    8. Méon, Pierre-Guillaume & Weill, Laurent, 2010. "Is Corruption an Efficient Grease?," World Development, Elsevier, vol. 38(3), pages 244-259, March.
    9. Qing Liu & Ruosi Lu & Xiangjun Ma, 2015. "Corruption, Financial Resources and Exports," Review of International Economics, Wiley Blackwell, vol. 23(5), pages 1023-1043, November.
    10. Keith Blackburn & Niloy Bosey & Salvatore Capasso, 2008. "Living With Corruption: Threshold Effects in Red Tape and Rent Seeking," Working Papers 4_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    11. Aljarallah, Ruba A., 2021. "An assessment of the economic impact of natural resource rents in kingdom of Saudi Arabia," Resources Policy, Elsevier, vol. 72(C).
    12. Giorgio d’Agostino & Luca Pieroni, 2019. "Modelling Corruption Perceptions: Evidence from Eastern Europe and Central Asian Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(1), pages 311-341, February.
    13. Quoc-Anh Do & Trang Van Nguyen & Anh Tran, 2013. "Do People Pay Higher Bribes for Urgent Services ?: Evidence from Informal Payements to Doctors in Vietnam," Sciences Po publications info:hdl:2441/3tk4fhvbi18, Sciences Po.
    14. Søreide, Tina, 2009. "Too risk averse to stay honest?: Business corruption, uncertainty and attitudes toward risk," International Review of Law and Economics, Elsevier, vol. 29(4), pages 388-395, December.
    15. Schumacher, Ingmar, 2013. "Political stability, corruption and trust in politicians," Economic Modelling, Elsevier, vol. 31(C), pages 359-369.
    16. Bertrand Venard, 2013. "Institutions, Corruption and Sustainable Development," Post-Print hal-00874275, HAL.
    17. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2011. "The Impact of Institutions on the Shadow Economy and Corruption: A Latent Variables Approach," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 13, Edward Elgar Publishing.
    18. Emran, M. Shahe & Islam, Asadul & Shilpi, Forhad, 2013. "Admission is free only if your dad is rich! distributional effects of corruption in schools in developing countries," Policy Research Working Paper Series 6671, The World Bank.

    More about this item

    Keywords

    Firm; Corruption; Dynamic; Growth; Shadow Price; Developing Countries JEL Classification: C51; D81; E60; K49; M29;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
    • M29 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Other

    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:uta:papers:2013_10. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/deuutus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.