The Incidence of Graft on Developing-Country Firms
This paper measures the extent to which firms in developing countries are the target of bribes. Using new firm-level survey data from 33 African and Latin American countries, we first show that perceptions adjust slowly to firms' experience wi...
| Main Authors: | , , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/11/8682858/incidence-graft-developing-country-firms http://hdl.handle.net/10986/7529 |
| Summary: | This paper measures the extent to which
firms in developing countries are the target of bribes.
Using new firm-level survey data from 33 African and Latin
American countries, we first show that perceptions adjust
slowly to firms' experience with corrupt officials and
hence are an imperfect proxy for the true incidence of
graft. We then construct an experience-based index that
reflects the probability that a firm will be asked for a
bribe in order to complete a specified set of business
transactions. On average, African firms are three times as
likely to be asked for bribes as are firms in Latin America,
although there is substantial variation within each region.
Last, we show that graft appears to be more prevalent in
countries with excessive regulation and where democracy is
weak. In particular, our results suggest that the incidence
of graft in Africa would fall by approximately 85 percent if
countries in the region had levels of democracy and
regulation similar to those that exist in Latin America. |
|---|