Corruption and Firm Growth: Evidence from Around the World

28 Pages Posted: 5 May 2021

See all articles by Raymond J. Fisman

Raymond J. Fisman

National Bureau of Economic Research (NBER); Boston University

Sergei Guriev

Sciences Po; Centre for Economic Policy Research (CEPR)

Carolin Ioramashvili

London School of Economics & Political Science (LSE) - London School of Economics

Alexander Plekhanov

European Bank for Reconstruction and Development (EBRD)

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Date Written: April 23, 2021

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 wideranging 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.

Keywords: corruption, firm growth, enterprise surveys

JEL Classification: D22, O12

Suggested Citation

Fisman, Raymond and Guriev, Sergei and Ioramashvili, Carolin and Plekhanov, Alexander, Corruption and Firm Growth: Evidence from Around the World (April 23, 2021). EBRD Working Paper No. 255, Available at SSRN: https://ssrn.com/abstract=3836556 or http://dx.doi.org/10.2139/ssrn.3836556

Raymond Fisman (Contact Author)

National Bureau of Economic Research (NBER)

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Boston University ( email )

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Sergei Guriev

Sciences Po ( email )

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Paris Cedex 07, 75337
France

HOME PAGE: http://econ.sciences-po.fr/staff/sergei-guriev

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Carolin Ioramashvili

London School of Economics & Political Science (LSE) - London School of Economics ( email )

United Kingdom

Alexander Plekhanov

European Bank for Reconstruction and Development (EBRD) ( email )

One Exchange Square
London, EC2A 2EH
United Kingdom

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