Assessing the Effects of Corruption and Crime on Firm Performance

36 Pages Posted: 9 Oct 2001

See all articles by Alejandro Gaviria

Alejandro Gaviria

Universidad de los Andes, Colombia - Department of Economics

Date Written: March 2001

Abstract

This paper uses a survey of private firms to assess the effects of corruption upon the economic prospects of firms. The paper studies whether corruption and crime affect sales, investment and employment growth at the firm level, and whether bribes and illegal payments by firms reduce bureaucratic interference. The paper finds that corruption and crime substantially reduces sales growth, and that corruption and bureaucratic interferences are positively correlated at the firm level, which casts serious doubts on various theories that postulate that corruption may increase efficiency by allowing firms to circumvent government regulations. Overall, the results of the paper suggest that corruption and crime substantially reduces firm competitiveness and that corruption is quite unlikely to have any positive effects.

Keywords: Governance competitiveness

Suggested Citation

Gaviria, Alejandro, Assessing the Effects of Corruption and Crime on Firm Performance (March 2001). Available at SSRN: https://ssrn.com/abstract=286651 or http://dx.doi.org/10.2139/ssrn.286651

Alejandro Gaviria (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

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