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Firm-Level Corruption in Vietnam

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  • John Rand
  • Finn Tarp

Abstract

This article uses panel data from a survey of small- and medium-sized enterprises in Vietnam to uncover which firms pay bribes and which do not. We also study how bribe paying evolved between 2005 and 2007 and test how the determinants of bribes changed between the two years. Three sets of insights emerge. First, bribe incidence is highly associated with firm-level differences in visibility, sunk costs, ability to pay, and some, but not all, types of interaction with public officials. Second, the magnitudes of bribes are distinctly higher for firms, which get preferential tax benefits and government contracts. Third, the observed decrease in bribe incidence between 2005 and 2007 is largely driven by significant behavioral changes. These behavioral changes seem to be associated with policy initiatives to improve law enforcement and increased media focus on punitive actions against corruption.

Suggested Citation

  • John Rand & Finn Tarp, 2012. "Firm-Level Corruption in Vietnam," Economic Development and Cultural Change, University of Chicago Press, vol. 60(3), pages 571-595.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/664022
    DOI: 10.1086/664022
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