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Greasing the Wheels? The Effect of Corruption in Regulated Manufacturing Sectors of India

Author

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  • Takahiro Sato

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

  • Atsushi Kato

    (School of Business, Aoyama Gakuin University)

Abstract

We investigate whether corruption “greases the wheels” of bureaucracies and enhances economic performance. Specifically, we examine the interaction effect of corruption and regulation on the economic performance of manufacturing industries in India. Our estimation results show that the combination of corruption and regulation has significant positive effects on gross value added per worker, total factor productivity, and capital labor ratio. This indicates the existence of a “greasing the wheels” effect.

Suggested Citation

  • Takahiro Sato & Atsushi Kato, 2014. "Greasing the Wheels? The Effect of Corruption in Regulated Manufacturing Sectors of India," Discussion Paper Series DP2014-07, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2014-07
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    Cited by:

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    2. Fangtao Liu & Yong Ding & Jia Gao & Pu Gong, 2017. "Effects of Cost Factors on National Manufacturing Based on Global Perspectives," Economies, MDPI, vol. 5(4), pages 1-16, November.
    3. Subramaniam Ananthram & Christopher Chan, 2016. "Religiosity, spirituality and ethical decision-making: Perspectives from executives in Indian multinational enterprises," Asia Pacific Journal of Management, Springer, vol. 33(3), pages 843-880, September.
    4. Tian, Ni & Zhang, Zongyi, 2018. "How do anticorruption measures affect executive incentive?," Finance Research Letters, Elsevier, vol. 24(C), pages 179-185.
    5. Ștefan Cristian Gherghina & Liliana Nicoleta Simionescu & Oana Simona Hudea, 2019. "Exploring Foreign Direct Investment–Economic Growth Nexus—Empirical Evidence from Central and Eastern European Countries," Sustainability, MDPI, vol. 11(19), pages 1-33, September.
    6. Marwa Sallemi & Salah Ben Hamad & Nejla Ould Daoud Ellili, 2023. "Executive compensation and bank’s stability: which role of the corruption control? An empirical evidence from OECD banks," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(2), pages 457-477, June.
    7. Farzanegan, Mohammad Reza & Witthuhn, Stefan, 2017. "Corruption and political stability: Does the youth bulge matter?," European Journal of Political Economy, Elsevier, vol. 49(C), pages 47-70.
    8. Malkina, M. & Ovchinnikov, V., 2020. "Influence of regulatory burden and involvement of business in corruption on revenue: Grease vs sand effect," Journal of the New Economic Association, New Economic Association, vol. 47(3), pages 40-65.
    9. Demir, Firat & Hu, Chenghao & Liu, Junyi & Shen, Hewei, 2022. "Local corruption, total factor productivity and firm heterogeneity: Empirical evidence from Chinese manufacturing firms," World Development, Elsevier, vol. 151(C).

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    More about this item

    Keywords

    corruption; regulation; gross value added per worker; TFP;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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