Poverty Reduction and Economic Structure: Comparative Path Analysis for Mozambique and Vietnam

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Documents

  • Thomas Channing Arndt
  • Andres Garcia
  • Tarp, Finn
  • James Thurlow
This paper uses a unique panel dataset on firm-level corruption. It contains quantitative information on bribe payments by a sample of formal and informal Vietnamese firms. We show that bribe incidence is highly associated with firm-level differences in (i) visibility, (ii) sunk costs, (iii) ability to pay, and (iv) level of interaction with public officials. Moreover, when informal firms become formal the probability of paying bribes increases. Becoming formal is also associated with a revenue growth premium that is not driven by self-selection of well-performing firms. On average, this premium outweighs the additional bribe cost of formalization. Formalization embodies net benefits in spite of the growth hampering effects of bribes.
Original languageEnglish
Place of PublicationHelsinki
PublisherUNU-WIDER
Number of pages26
ISBN (Electronic)978292303600
Publication statusPublished - 2010

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