TY - UNPB
T1 - Aid, Growth, and Development
T2 - Have We Come Full Circle?
AU - Arndt, Channing
AU - Jones, Edward Samuel
AU - Tarp, Finn
N1 - JEL classification: O1, O4, F35, C21
PY - 2010
Y1 - 2010
N2 - This paper uses a unique panel dataset on firm-level corruption. It contains quantitative information on bribe payments by a sample of formal and informal Vietnamese firms. We show that bribe incidence is highly associated with firm-level differences in (i) visibility, (ii) sunk costs, (iii) ability to pay, and (iv) level of interaction with public officials. Moreover, when informal firms become formal the probability of paying bribes increases. Becoming formal is also associated with a revenue growth premium that is not driven by self-selection of well-performing firms. On average, this premium outweighs the additional bribe cost of formalization. Formalization embodies net benefits in spite of the growth hampering effects of bribes.
AB - This paper uses a unique panel dataset on firm-level corruption. It contains quantitative information on bribe payments by a sample of formal and informal Vietnamese firms. We show that bribe incidence is highly associated with firm-level differences in (i) visibility, (ii) sunk costs, (iii) ability to pay, and (iv) level of interaction with public officials. Moreover, when informal firms become formal the probability of paying bribes increases. Becoming formal is also associated with a revenue growth premium that is not driven by self-selection of well-performing firms. On average, this premium outweighs the additional bribe cost of formalization. Formalization embodies net benefits in spite of the growth hampering effects of bribes.
KW - Faculty of Social Sciences
KW - firm performance
KW - corruption
KW - Vietnam
M3 - Working paper
BT - Aid, Growth, and Development
PB - UNU-WIDER
CY - Helsinki
ER -