Taxes, corruption, and entry

Tax policies and corruption are important institutional considerations which can shape entrepreneurship. We investigate how tax rates, and the interaction between corruption and tax rates, influence variations in entry across a panel of 72 countries in the period 2005���2011. We use a series of panel estimations as well as several robustness checks to test these effects, using relevant controls for economic development, the size of the state, and other regulatory and tax policy measures. We find that higher tax rates consistently discourage entry. Further, we find that although the direct influence of corruption on entry is also consistently negative, the interaction influence of corruption and tax rate is positive. This indicates that corruption can offset the negative influence of high taxes on entry. We discuss the implications of our findings for policymakers and future research.

Wickedness, Governance and Collective Sanctions: : Can Corruption be Tamed?

Tackling a problem requires mostly, an ability to read it, conceptualize it, represent it, define it, and then applying the necessary mechanisms to solve it. This may sound self-evident except when the problem to be tackled happens to be ���complex, ��� ���ill-structured,��� and/or ���wicked.��� Corruption is one of those kinds of problems. Both in its global and national manifestations it is ill-structured. Where it is structural in nature, endemic and pervasive, it is perhaps even wicked. Qualities of the kind impose modest expectations regarding possibilities of any definitive solution to this insidious phenomenon. If so, it may not suffice to address the problem of corruption using existing categories of law and/or good governance, which overlook the ���long-term memory��� of the collective and cultural specific dimensions of the subject. Such socio-historical conditions require focusing on the interactive and self-reproducing networks of corruption and attempting to ���subvert��� that phenomenon���s entire matrix. Concepts such as collective responsibility, collective punishment and sanctions are introduced as relevant categories in the structural, as well as behavioral, subversion of some of the most prevalent aspects of corruption. These concepts may help in the evolving of a new perspective on corruption fighting strategies.

Corruption, governance and collective sanctions: : can a wicked problem be tamed?

Tackling a problem requires mostly, an ability to read it, conceptualize it, represent it, define it, and then applying the necessary mechanisms to solve it. This may sound self-evident except when the problem to be tackled happens to be ���complex, ��� ���ill-structured,��� and/or ���wicked.��� Corruption is one of those kinds of problems. Both in its global and national manifestations it is ill-structured. Where it is structural in nature, endemic and pervasive, it is perhaps even wicked. Qualities of the kind impose modest expectations regarding possibilities of any definitive solution to this insidious phenomenon. If so, it may not suffice to address the problem of corruption using existing categories of law and/or good governance, which overlook the ���long-term memory��� of the collective and cultural specific dimensions of the subject. Such socio-historical conditions require focusing on the interactive and self-reproducing networks of corruption and attempting to ���subvert��� that phenomenon���s entire matrix. Concepts such as collective responsibility, collective punishment and sanctions are introduced as relevant categories in the structural, as well as behavioral, subversion of some of the most prevalent aspects of corruption. These concepts may help in the evolving of a new perspective on corruption fighting strategies.

How does corruption hurt growth? Evidences about the effects of corruption on factors productivity and per capita income

Corruption is a phenomenon that plagues many countries and, mostly, walks hand in hand with inefficient institutional structures, which reduce the effectiveness of public and private investment. In countries with widespread corruption, for each monetary unit invested, a sizable share is wasted, implying less investment. Corruption can also be a burden on a nation���s wealth and economic growth, by driving away new investment and creating uncertainties regarding private and social rights. Thus, corruption can affect not only factors productivity, but also their accumulation, with detrimental consequences on a society���s social development. This article aims to analyze and measure the influence of corruption on a country���s wealth. It is implicitly admitted that the degree of institutional development has an adverse effect on the productivity of production factors, which implies in reduced per capita income. It is assumed that the level of wealth and economic growth depends on domestic savings, foster technological progress and a proper educational system. Corruption, within this framework, is not unlike an additional cost, which stifles the ���effectiveness��� of the investment. This article first discusses the key theories evaluating corruption���s economic consequences. Later, it analyzes the relation between institutional development, factor productivity and per capita income, based on the neoclassical approach to economic growth. Finally, it brings some empirical evidence regarding the effects of corruption on factor productivity, in a sample of 81 countries studied in 1998. The chief conclusion is that corruption negatively affects the wealth of a nation by reducing capital productivity, or its effectiveness.

Estimating the effect of discretionary spending on corruption: evidence from Brazilian municipalities

O presente artigo estuda a rela����o entre corrup����o e discricionariedade do gasto p��blico ao responder a seguinte pergunta: regras de licita����o mais r��gidas, uma proxy para discricionariedade, resultam em menor preval��ncia de corrup����o nos munic��pios brasileiros? A estrat��gia emp��rica �� uma aproxima����o de regress��es em dois est��gios (2SLS) estimadas localmente em cada transi����o de regras de licita����o, cuja fonte de dados de corrup����o �� o Programa de Fiscaliza����o por Sorteio da CGU e os dados sobre discricionariedade s��o derivados da Lei 8.666/93, respons��vel por regular os processos de compras e constru����o civil em todas as esferas de governo. Os resultados mostram, entretanto, que menor discricionariedade est�� relacionada com maior corrup����o para quase todos os cortes impostos pela lei de licita����es.

Reelection incentives and political corruption : evidence from Brazil���s municipal audit reports

This paper uses a unique dataset of political corruption, constructed from municipal audit reports obtained from Brazil���s randomized anti-corruption program, to test whether reelection incentives affect the level of rent extraction of incumbent politicians. In order to identify reelection incentives, we use the existence of a term limit in Brazil���s municipal elections. We find that in municipalities where mayors are in their second and final term, there is significantly more corruption compared to similar municipalities where mayors are in their first-term. In particular, in municipalities with second-term mayors there is, on average, R$188,431 more diversion of resources and the incidence of irregularities is 23% higher. We also find more pronounced effects where the costs of rent-extraction are lower (municipalities without media and judicial presence), and the density of pivotal voters is higher (more political competition). Finally, we show that first-term mayors, while less corrupt, have a larger incidence of poor administration suggesting that there may exist a trade-off between corruption and quality in public good provision.

The impact of corruption on the performance of state-owned companies: case of Petrobras Brasil

As empresas estatais s��o freq��entemente consideradas como componentes cruciais da economia de um pa��s. Eles s��o respons��veis pela cria����o de v��rios postos de trabalho e proveem servi��os essenciais que exigem um grande investimento de capital. Por��m, em pa��ses com institui����es fracas, onde a responsabilidade dos pol��ticos �� limitada e a gest��o dos recursos financeiros das empresas estatais sofre pouco controle, os funcion��rios s��o muitas vezes tentados pela corrup����o. Enormes quantidades de fundos p��blicos s��o facilmente desviados, e dinheiro que deveria ter sido investido nas despesas de capital, no pagamento de d��vida da empresa ou no aumento do retorno para os acionistas, �� usado para aumentar a riqueza privada de indiv��duos ou para financiar ilegalmente partidos pol��ticos. O desempenho da empresa sofre com essas aliena����es visto que parte dos lucros da empresa n��o s��o reinvestidos na empresa e dado que incentivos dos gestores est��o desalinhados com os interesses dos acionistas. Petrobras, a maior empresa da Am��rica Latina em termos de ativos e receitas anuais, sofreu em 2014 e 2015 um esc��ndalo de corrup����o imenso, cujo impacto econ��mico foi consider��vel, levando ao enfraquecimento da confian��a de muitos investidores no Brasil ap��s o evento. O esc��ndalo exp��s um extenso esquema de corrup����o atrav��s do qual os contratantes foram conspirando para aumentar os pre��os de contratos de constru����o, com a aprova����o da administra����o da Petrobras que pediu em troca ganhos pessoais ou fundos para o Partido dos Trabalhadores (PT). A exposi����o do esc��ndalo na imprensa brasileira teve um grande impacto sobre a credibilidade da Petrobras: as contas da empresa estavam escondendo imensas irregularidades dado que a empresa tinha pago demais para os contratos de constru����o que n��o foram precificados no valor do mercado. Ao longo deste estudo, usamos o exemplo da Petrobras para ilustrar como a corrup����o dentro empresas estatais prejudica o desempenho da empresa e como ela afeta as v��rias partes interessadas da empresa.

Decentralization and corruption: evidence from primary health-care programmes

The aim of this article is to evaluate whether there is an association between decentralization and corruption. In order to do so we analyse Brazilian health-care programmes that are run locally. To construct objective measures of corruption, we use the information from the reports of the auditing programme of the local governments of Brazil. Results point that there is no relationship between decentralization and corruption, whatever the measure of decentralization used.