Why do firms pay bribes? Evidence on the demand and supply sides of corruption in developing countries

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Enforcement of environmental protection protocols and compliance amongst Micro Small and Medium Enterprises inZimbabwe: Is institutional credibility effectual in the presence of corruption tendencies?

“…When possible, some entrepreneurs will bribe the government to tolerate environmental degradation since compliance is costly (Zhou, Luo, Ye & Tao, 2022). The problem of entrepreneurs bribing environmental regulators is exacerbated in developing countries due to the weak institutional environments epitomized by government corruption, less developed legal frameworks, poorly remunerated public officials and in some cases acceptance of bribery as a social norm (Gauthier, Goyette & Kouamé 2021;Ha, Nam & Thanh, 2021).…”

Do deep regional trade agreements strengthen anti‐corruption? A social network analysis

“…Similarly, we also create indexes for the breadth of RTAs, RTA breadth , where all provisions listed in the breadth field defined by Limão (2016) are utilised. 13 Consequently, RTA anti-corruption will reflect some obligated relations involved in general anti-corruption provisions, such as public procurement (see Dávid-Barrett & Fazekas, 2020;Gauthier et al, 2021;Hoekman et al, 2022), anti-corruption and fair competition between the member countries. For instance, this kind of challenge in the FTAs is most visible between the member of the EU and NAFTA.…”

“…Wealthy nations also have greater educational attainment of the population, and that would imply a greater understanding and adherence to laws (anti‐corruption or otherwise), ceteris paribus. Finally, the opportunity costs of breaking the law by bribe‐takers and bribe‐givers might be greater in richer countries (Gauthier et al, 2021). It is possible, however, that corruption can impact economic prosperity via reverse feedbacks.…”

Effects of corruption on foreign direct investment: Evidence from Swedish multinational enterprises

“…Bribes required to comply with market entry regulation are larger than in areas where officials have less power over production constraints. Grand corruption improves the market position of enterprises that are (willing and) able to pay high bribes (Gauthier et al, 2021;Hellman et al, 2003), which may stimulate the market entry of corrupt MNEs that set up production to make big business.…”