We would like to thank the participants in the 2009 Midwest Economic Association Meetings and an anonymous referee for their helpful comments. We are responsible for any remaining errors.
Corruption, Bureaucracy and Firm Productivity in Africa
Version of Record online: 22 JAN 2013
© 2013 Blackwell Publishing Ltd
Review of Development Economics
Volume 17, Issue 1, pages 117–129, February 2013
How to Cite
Faruq, H., Webb, M. and Yi, D. (2013), Corruption, Bureaucracy and Firm Productivity in Africa. Review of Development Economics, 17: 117–129. doi: 10.1111/rode.12019
- Issue online: 22 JAN 2013
- Version of Record online: 22 JAN 2013
This paper estimates the impact of corruption and poor bureaucratic quality on firm productivity for a unique dataset with firm-specific data of more than 900 firms over 12 years for Ghana, Kenya and Tanzania. We first discuss why poor bureaucratic quality and, especially, corruption are expected to have negative impacts on firm productivity. We then employ Data Envelopment Analysis to estimate firm productivity and pooled OLS and Tobit regression analysis to estimate the effects of corruption and bureaucratic quality on firm productivity. We find that less productive firms are more likely to engage in corrupt activities; both poor bureaucratic quality and corruption reduce firm productivity; and corruption has a greater negative impact on productivity.