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Are corruption and taxation really harmful to growth? Firm level evidence
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2007 (English)In: Journal of Development Economics, Vol. 83, no 1, 63-75 p.Article in journal (Refereed) Published
Abstract [en]

Exploiting a unique data set containing information on the estimated bribe payments of Ugandan firms, we study the relationship between bribery payments, taxes and firm growth. Using industry-location averages to circumvent potential problems of endogeneity and measurement errors, we find that both the rate of taxation and bribery are negatively correlated with firm growth. A one-percentage point increase in the bribery rate is associated with a reduction in firm growth of three percentage points, an effect that is about three times greater than that of taxation. This provides some validation for firm-level theories of corruption which posit that corruption retards the development process to an even greater extent than taxation.

Place, publisher, year, edition, pages
2007. Vol. 83, no 1, 63-75 p.
Keyword [en]
Corruption, Taxation, Firm growth
National Category
URN: urn:nbn:se:su:diva-19906DOI: doi: 000243734800003OAI: diva2:186430
Available from: 2007-02-15 Created: 2007-02-15 Last updated: 2011-01-11Bibliographically approved

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Svensson, Jakob
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Institute for International Economic Studies

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