Corruption and Firms
Authors
Colonnelli, Emanuele
Prem, Mounu
Editor
Publication date
2017-01
Document language
eng
Publisher
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Abstract
We estimate the causal real economic effects of a randomized anticorruption crackdown on local governments in Brazil over the period 2003-2014.
After anti-corruption audits, municipalities experience an increase in economic activity concentrated in sectors most dependent on government relationships. These
effects spill over to nearby municipalities and are larger when the audits are covered
by the media. Back-of-the-envelope estimates suggest that $1 away from corruption generates more than $3 in local value added. Using administrative matched
employer-employee and firm-level datasets and novel face-to-face firm surveys we
argue that corruption mostly acts as a barrier to entry, and by introducing costs
and distortions on local government-dependent firms. The political misallocation of
resources across firms plays a seemingly secondary role, indicating that at the local
level most rents are captured by politicians and public officials rather than firms.
Description
Códigos JEL
D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption, H83 - Public Administration; Public Sector Accounting and Audits, D22 - Firm Behavior: Empirical Analysis
item.page.subjectjelspa
D73 - Burocracia; Procesos administrativos en organizaciones públicas; Corrupción, H83 - Administración pública; Contabilidad y auditoría del sector público, D22 - Comportamiento de la empresa: análisis empíricos
Keywords
Corruption, Firms, Audits, Public Procurement, Misallocation, Labor Reallocation, Political Connections
