Regulatory bottlenecks, transaction costs and corruption: A cross-country investigation

This paper uses recent data on a large cross-section of countries to study the determinants of corrupt activity. The main contribution is to examine the effects of different types and severities of government regulations on corrupt activities. The results show that greater prosperity and democracy lead to less corrupt activity. Variables representing the degree of fractionalization across three dimensions and least developed nations are statistically insignificant. Having more regulation, including number of procedures and time involved across four categories (business startup, licensing, property registration, and taxation), leads to greater corruption. More regulatory procedures, especially for business startups and property registrations, have the most corruption-enhancing effect. Whereas lengthier procedures also generally spur corruption, there are important differences. Finally, higher regulatory transactions costs do not seem to significantly impact corruption. Policy implications are discussed.corruption; business startup; licenses; property; taxes; fractionalization; democracy; prosperity

Composition of Exports and Cross-Country Corruption

This research examines the connection between a country’s export structure and corruption, incorporating disaggregated data on exports for a recent time period over a large set of nations. We ask whether various types of exports (e.g. agricultural, mineral, manufacturing and fuel) exert similar influences on corruption across nations. Our results suggest that corruption decreases as nations attain prosperity, as economic and political freedoms increase, and with a larger government size. Ceteris paribus, transition countries are also found to be more corrupt. Ethnic and linguistic fractionalizations exert opposite influences on corruption, while religious fractionalization does not seem to matter. Although the effects of ore and manufacturing exports are statistically insignificant, agricultural and fuel exports affect corruption significantly. Our findings for fuel exports support previous research, as well as uniquely demonstrate that the impact of fuel exports is sensitive to the prevailing corruption level. We conclude with a discussion of policy implications.corruption; exports; resource curse; government

Financial settlement modes and corruption: Evidence from developed nations

Using recent pooled data from several developed nations, the paper uniquely examines whether the composition of payment instruments has a bearing on the prevalence of corruption in a country. Our results suggest that the choice of instruments matters. Paper credit transfer transactions are consistently associated with corrupt activities, while credit card transactions tend to reduce them. Cheques generally increase corruption, the results with respect to nonpaper credit transfers are mixed, while direct debits fail to show significant effects on corruption. These findings hold for alternative corruption measures and when allowance is made for endogeneity of payment instruments.corruption; cheques; credit card; cash; direct debit; payment instruments

Causes of Corruption:History, Geography, and Government

Corruption, which remains a serious problem in many countries, has prompted considerable research in recent years. This paper adds to the extant literature with insights on factors influencing corrupt activity. Using cross-country data for about 100 nations, the roles of national history, geography, and government are examined to see how they affect conditions for corruption, both qualitatively and quantitatively. The innovative aspects of this research include use of a wide set of historical, geographical, and governmental determinants of corruption, as well as detailed assessment of several previously considered determinants. The main issues addressed are the effects of the size and scope of government on the incidence of corruption across countries, and the significance of historical and geographic factors in corruption. Regarding the first question, the authors find the size and scope of government can significantly affect corruption. On the second, it is shown that historical institutional inertia in older countries and new rent-seeking opportunities in younger nations can encourage corruption, while certain geographic factors can mitigate corruption. The paper ends with discussion aimed at the policymaker.corruption; bribery; government size; government scope; rent-seeking; history; geography

Causes of Corruption in Russia: A Disaggregated Analysis

This paper examines determinants of corruption across Russian regions. Key contributions include: (i) a formal study of economic corruption determinants across Russian regions; (ii) comparisons of determinants of perceived corruption versus those of actual corruption; and (iii) studying the influence of market competition and other factors on corruption. The results show that economic prosperity, population, market competition and urbanization are significant determinants of Russian corruption. The use of alternative corruption measures reveals that economic prosperity and population have a largely similar impact on corruption perceptions and corruption incidence. However, there are significant differences in the effects of competition and urbanization.corruption perceptions; corruption incidence; Russia; government; competition

Causes of Corruption in Russia: A Disaggregated Analysis

This paper examines determinants of corruption across Russian regions. Key contributions include: (i) a formal study of economic corruption determinants across Russian regions; (ii) comparisons of determinants of perceived corruption versus those of actual corruption; and (iii) studying the influence of market competition and other factors on corruption. The results show that economic prosperity, population, market competition and urbanization are significant determinants of Russian corruption. The use of alternative corruption measures reveals that economic prosperity and population have a largely similar impact on corruption perceptions and corruption incidence. However, there are significant differences in the effects of competition and urbanization.corruption perceptions, corruption incidence, Russia, government, competition

Are the informal economy and cryptocurrency substitutes or complements?

This research considers a new dimension of the effects of the underground sector by examining the spillovers on cryptocurrency holdings. Cryptocurrencies offer a relatively greater ability to dodge taxes and ensure the anonymity of holders, providing attractive avenues for underground operators to stash their informal-sector earnings. Our results, based on data from more than 50 nations, show that a greater prevalence of the underground economy in a nation is indeed associated with greater cryptocurrency holdings. This result holds across an alternative measure of the shadow economy, and when the bi-directional causality between the shadow economy and cryptocurrency holdings is considered. In other noteworthy findings, greater FDI crowded out cryptocurrency holdings, while greater financial globalization and greater economic uncertainty, ceteris paribus, increased them

Initiation of corrupt exchanges and severity of corruption

This paper examines the effectiveness of corruption control depending upon whether the bribe taker or the bribe giver initiates the corrupt interaction. The probability of corrupt exchanges depends upon the bribe and the corrupt market structure. The probability of apprehension is set but punishment can be influenced via bribes. Results show that the effectiveness of apprehension hinges on whether higher bribes invite harsher fines. Competition for favors intimidates the bribe giver into offering lower bribes, while greater agency competition has a similar effect on the bribe demanded. Consistent with intuition, better paid bureaucrats demand smaller bribes. Some implications for anti-corruption policy are discussed

International Disease Epidemics and the Shadow Economy

Adding to the emerging body of research related to the current coronavirus crisis, this paper studies the impact of disease epidemics on the worldwide prevalence of the shadow or the underground economy. The informal sector undermines compliance with government regulations and lowers tax collections. Our main hypothesis is that epidemics positively impacts the spread of the shadow economy. Using data on nearly 130 nations and nesting the empirical analysis in the broader literature on the drivers of the shadow sector, we find that both the incidence and the intensity of epidemics positively and significantly contribute to the spread of the underground sector. Numerically, a ten percent increase in the intensity of epidemics leads to an increase in the prevalence of the shadow economy by about 2.1 percent. These findings about the spillovers from epidemics have implications for economic policies in the current times of coronavirus. JEL-Codes: I150, K420

Environmental versus Social Externalities and Life Satisfaction: A Cross-Country Investigation

U ovom se radu istražuju determinante životnog zadovoljstva na uzorku od 135 zemalja. Osnovni se doprinos rada sastoji u ispitivanju osjetljivosti životnog zadovoljstva na okolišne i društvene eksternalije. Rezultati analize, pritom, imaju implikacije i za nosioce javnih politika. Naime, oni pokazuju da neki faktori konzistentno utječu na razinu životnog zadovoljstva građana, bez obzira jesu li okolišne ili društvene eksternalije uključene u analizu. Postoji, međutim, i skup faktora čiji utjecaj na razinu životnog zadovoljstva oscilira ako se spomenute eksternalije uključe u analizu. Rezultati analize također pokazuju da je razina životnog zadovoljstva u tranzicijskim zemljama, uz ostale nepromijenjene uvjete, niža u odnosu na druge zemlje iz uzorka, upućujući na zaključak da u ovim zemljama nisu ostvarena ranija očekivanja građana.Using recent cross-country data for 135 nations, this paper examines the determinants of life satisfaction. The main contribution lies in examining the sensitivity of satisfaction to externalities, both social and environmental. Besides contributing to the literature, the findings also have some implications for public policy. The results show that some factors consistently affect life satisfaction whether or not externalities are considered, while others are sensitive to such considerations. Even under each category of spillovers, the influence in satisfaction varies. Further, other things being the same, satisfaction was lower in transition nations, perhaps signifying that these countries were somehow failing to meet the expectations of their citizens