Corruption is an important, and not well understood, problem in economies of all sorts. It can degrade trust and predictability in transactions and may alter distributions of wealth and opportunity. Most corruption studies treat countries as monoliths without attention to corruption in specific industries and individual firms across countries. Also, most assume corruption has only negative effects.
In this study, a unique and comprehensive database will be used to study the illegal activities of firms across 76 countries, focusing on small innovative firms in both the public and private sectors. The framework and the data used in this project enable the research team to address new questions, including questions about possible positive effects of corruption and tax evasion. The researchers will explore, for example: whether corruption constitutes a tax on innovation; whether firms that bribe receive special advantages in dealing with bureaucracy and regulation; whether certain industries have a proclivity towards bribe payments and tax evasion?; and what factors explain the distribution of firms as victims and perpetrators within and across countries.
The findings should have direct implications for policy reform in designing anti-corruption strategies and in informing strategies to improve tax collection and administration.
