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Journal of Development Economics
Volume 83, Issue 1, May 2007, Pages 63-75
Are corruption and taxation really harmful to growth? Firm level evidence
Raymond​Fisman​
a​b​
Jakob​Svensson​
c​d​e
https://doi.org/10.1016/j.jdeveco.2005.09.009
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Abstract
Exploiting a unique data set containing information on the estimated bribe payments of Ugandan firms, we study the relationship between bribery payments, taxes and firm growth. Using industry-location averages to circumvent potential problems of endogeneity and measurement errors, we find that both the rate of taxation and bribery are negatively correlated with firm growth. A one-percentage point increase in the bribery rate is associated with a reduction in firm growth of three percentage points, an effect that is about three times greater than that of taxation. This provides some validation for firm-level theories of corruption which posit that corruption retards the development process to an even greater extent than taxation.
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JEL classification
D92H25O14
Keywords
Corruption​Taxation​Firm growth
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