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Book
Does Corruption Hurt Employment Growth of Financially Constrained Firms More?
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Year: 2020 Publisher: Washington, D.C. : The World Bank,

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Abstract

Payments of bribes and the expenses incurred on rent-seeking activities impose a significant financial burden on private firms, which is compounded when they do not have enough funds of their own or find it costly to borrow externally. This paper hypothesizes that financial constraints magnify the harmful effects of corruption. It applies this idea to the impact of corruption on employment growth among private firms. Using firm-level survey data for 109 countries, the analysis finds that corruption has a much larger negative impact on employment growth for firms that are financially constrained compared with firms that are not financially constrained. For the baseline specification, a one standard deviation increase in the bribery rate brings about a decline in the annual growth rate of employment of financially constrained firms that is 2.3 percent greater than that for firms that are not financially constrained. This is a large difference given that the mean employment growth is about 5.1 percent. The results show that corruption "sands the wheel" at high levels of financial constraint and "greases the wheels" of an otherwise slow bureaucracy at low levels of financial constraint.


Book
Corruption and Country Size : Evidence Using Firm-Level Survey Data
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Year: 2019 Publisher: Washington, D.C. : The World Bank,

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What sorts of conditions make some countries more prone to corruption than the others? This is an important question for understanding how corruption arises and how to combat it. The present paper attempts to answer this question by exploring the link between the size of the country and corruption. Economic theory suggests advantages and disadvantages of being a large country. Fixed costs in monitoring and punishing corrupt politicians and bureaucrats implies lower corruption in larger countries. However, congestion or administrative costs may escalate with country size. Further, greater diversity in the larger countries implies that such countries may find it harder to reach a consensus on growth-enhancing anti-corruption reforms. Thus, the corruption and country size relationship is an empirical issue. Using firm-level survey data for 135 countries, this paper finds that the level corruption experienced by the firms is positively correlated with country size. This holds for a measure of overall corruption and petty corruption that arises in availing specific government services. According to a conservative estimate, moving from a country the size of Namibia (25th percentile level in size) to a country the size of Morocco (75th percentile level) is associated with an increase in the level of overall corruption by 0.28 percentage point or about 23 percent of its mean value. The results are robust to several controls, alternative corruption measures, sample alternations, and different country size measures.


Book
Does Greater Regulatory Burden Lead to More Corruption? : Evidence Using Firm-Level Survey Data for Developing Countries
Authors: ---
Year: 2020 Publisher: Washington, D.C. : The World Bank,

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Regulation often creates opportunities for public officials to extract bribes. If this is true, deregulation offers a simple way to combat corruption. However, empirical evidence on the corruption and regulation nexus is limited. Further, the corruption indices used are based on experts' opinions, which may suffer from perception bias. The present paper attempts to address these shortcomings using firm-level survey data for 131 mostly developing countries on the experiences of the firms with bribery and regulatory burden. Exploiting within-country and industry-level variation in regulatory burden, the analysis finds a large, positive effect of regulatory burden on corruption. For the baseline results, the bribery rate is higher by about 0.03 percentage point for each percentage point increase in the regulatory burden. The finding is robust to several endogeneity checks.


Book
The Impact of Language of Instruction in Schools on Student Achievement : Evidence from Malaysia using the Synthetic Control Method
Authors: --- ---
Year: 2021 Publisher: Washington, D.C. : The World Bank,

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This paper employs the synthetic control method to examine the impact of using a non-native language as the medium of instruction in schools on a student's learning. Exploiting an unanticipated policy change in Malaysia and using data from the Trends in International Mathematics and Science Studies, the results show that changing the medium of instruction negatively influenced eighth graders' achievement in mathematics and science. The differential performance, by year and gender, suggests that using a non-native language throughout a student's schooling may have greater negative impact on the student's learning than switching the language of instruction in the middle of the student's schooling does. This paper sheds light on the various manners in which a language policy can adversely affect a student's learning outcomes. It also highlights how the transition in switching the language of instruction in schools can be implemented more effectively to mitigate its adverse effects.

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