How Petty is Petty Corruption? Evidence from Firm Surveys in Africa

25 Pages Posted: 9 Apr 2008

See all articles by George R. G. Clarke

George R. G. Clarke

Texas A&M International University - A.R. Sanchez Jr., School of Business

Date Written: April 1, 2008

Abstract

Recent firm-level surveys suggest that petty corruption is a serious problem for African firms, costing the average firm in many countries between 2.5 and 4.5 percent of sales. However, a minor difference in the way firms answer the question has a large effect on estimates of the size of the burden. On average, firms report payments that are between four and fifteen times higher when they report them as a percent of sales than when they report them in monetary terms. This paper discusses several possible reasons why there might be a difference including outliers, differences between firms that report bribes in monetary terms and firms that report them as a percent of sales, and the sensitivity of the corruption question. But none of these explanations explain the discrepancy. One plausible remaining reason is that firm managers overestimate bribes when they report them in percentage terms. If this is the case, petty corruption might be far less costly than the raw data suggest.

Keywords: Corruption, Africa, Firm Surveys

JEL Classification: K42, L51, O12, O17

Suggested Citation

Clarke, George, How Petty is Petty Corruption? Evidence from Firm Surveys in Africa (April 1, 2008). Available at SSRN: https://ssrn.com/abstract=1117631 or http://dx.doi.org/10.2139/ssrn.1117631

George Clarke (Contact Author)

Texas A&M International University - A.R. Sanchez Jr., School of Business ( email )

5201 University Blvd.
Laredo, TX 78041-1900
United States

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