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Investment decisions and exposure to crime and corruption

Author

Listed:
  • Subika Farazi

    (The World Bank)

  • Ahmed M Rostom

    (The World Bank)

  • Rishabh Sinha

    (The World Bank)

Abstract

Using firm-level data from Afghanistan, we find that undertaking investment raises the likelihood of experiencing episodes of crime and corruption. Our analysis suggests that firms more prone to criminal attacks are aware of the risks and accordingly make costly security arrangements to mitigate the impact. The likelihood of security spending is higher for formal firms and those having access to finance. The two policy instruments increase the availability of resources, some of which is spent to fight crime.

Suggested Citation

  • Subika Farazi & Ahmed M Rostom & Rishabh Sinha, 2020. "Investment decisions and exposure to crime and corruption," Economics Bulletin, AccessEcon, vol. 40(3), pages 2297-2303.
    • Handle: RePEc:ebl:ecbull:eb-19-00774
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I3-P200.pdf
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    References listed on IDEAS

    as
    1. Elizabeth Asiedu & James Freeman, 2009. "The Effect of Corruption on Investment Growth: Evidence from Firms in Latin America, Sub‐Saharan Africa, and Transition Countries," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 200-214, May.
    2. Jie Bai & Seema Jayachandran & Edmund J Malesky & Benjamin A Olken, 2019. "Firm Growth and Corruption: Empirical Evidence from Vietnam," The Economic Journal, Royal Economic Society, vol. 129(618), pages 651-677.
    3. Tilman Brück & Wim Naudé & Philip Verwimp, 2013. "Business under Fire: Entrepreneurship and Violent Conflict in Developing Countries," ULB Institutional Repository 2013/167759, ULB -- Universite Libre de Bruxelles.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Sinha, Rishabh, 2023. "Central America's deindustrialization," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 319-335.

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    More about this item

    Keywords

    Conflict; Corruption; Investment; Afghanistan; Firms;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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