Does Corruption Ease the Burden of Regulation? National and Subnational Evidence

Does corruption ease the burden of regulation? We test this question using survey data on business managers’ experience of dealing with regulation and corruption. We find that there is substantial within-country ... [ view full abstract ]

Does corruption ease the burden of regulation? We test this question using survey data on business managers’ experience of dealing with regulation and corruption. We find that there is substantial within-country variation in the burden of regulation and that corruption is associated with worse regulatory outcomes across a range of indicators at the country and subnational level. Our results, which hold over a number of specifications, are inconsistent with the hypothesis that corruption greases the wheels of commerce by easing the burden of regulation on the average firm in poor regulatory environments. Rather, our results suggest that corruption increases the burden and imposes large costs on businesses