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Assessing the Effects of Corruption and Crime on Firm Performance: Evidence from Latin America

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  • Alejandro Gaviria

Abstract

This paper uses a survey of private firms to assess the effects of corruption on the economic prospects of firms. The paper studies whether corruption and crime affect sales, investment and employment growth at the firm level, and whether bribes and illegal payments by firms reduce bureaucratic interference. The paper finds that corruption and crime substantially reduce sales growth, and that the reported levels of corruption and bureaucratic interferences are positively correlated at the firm level. Overall, the results of the paper suggest that corruption and crime substantially reduce firm competitiveness and that corruption is unlikely to have any positive effects.

Suggested Citation

  • Alejandro Gaviria, 2002. "Assessing the Effects of Corruption and Crime on Firm Performance: Evidence from Latin America," Investigación Económica en Colombia 1902, Fundación Pondo.
    • Handle: RePEc:col:000100:001902
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    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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