Are Corruption and Taxation Really Harmful to Growth? Firm-Level Evidence
Exploiting a unique data set containing information about the estimated bribe payments of Ugandan firms, the authors study the relationship between bribe payments, taxes, and firm growth in Uganda for the period 1995-97. Using industry-location ave...
| Main Authors: | , |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/11/729381/corruption-taxation-really-harmful-growth-firm-level-evidence http://hdl.handle.net/10986/19766 |
| Summary: | Exploiting a unique data set containing
information about the estimated bribe payments of Ugandan
firms, the authors study the relationship between bribe
payments, taxes, and firm growth in Uganda for the period
1995-97. Using industry-location averages to circumvent the
potential problem of endogeneity, and to deal with issues of
measurement error, they find that both the rate of taxation,
and the rate of bribery are negatively correlated with firm
growth. For the full data set, a one percentage point
increase in the bribery rate is associated with three
percentage point reduction in firm growth - an effect about
three times that of taxation. Moreover, after excluding
outliers, the authors find that bribery has a much greater
negative impact on growth, and taxation a considerably
smaller one. This provides some validation of firm-level
theories of corruption, which posit that corruption retards
development, even more than taxation does. |
|---|