Essays On The Economics Of Corruption, Institutions, And Management Practices

My thesis focuses on the economics of corruption, institutions, and management practices. The impact of corruption on economic performance is a key issue in development economics, central to the evaluation and design of public policies. Chapter one introduces the theoretical framework of this thesis. It highlights the embeddedness of corruption at every institutional level and its interdependence with other institutions. The framework identifies petty and grand corruption and corruption at different levels, at the industry, region and country level, to examine the interrelation between corruption, other institutions, and management decisions on the resource allocation of firms, and the impact of public sector reforms in reducing corruption. Chapter two and three examine the two channels through which corruption affects private sector development, the external environment under which firms operate, and their internal environment. Chapter two analyses the relationship between corruption measured at different levels and firm performance. I find that at the individual firm level, corruption could be, in some cases, profit-maximizing. However, at the regional and country level, I find that the aggregate costs of corruption remain negative and significant for all firms. Chapter three examines the impact of corruption on the firm’s management practices. I investigate the impact of regional corruption on the management quality of firms within the manufacturing sector in Central and Eastern Europe. I find that firms in more contract-dependent industries located in more corrupt regions tend to have lower management quality. Chapter four by contrast looks at factors that help eliminate corruption at the macro-level, and specifically e-government. I find that the development of online services by the state tends to decrease corruption, and that progress in e-government can facilitate several business processes. Chapter five, concludes. I review the main contributions of the thesis and discuss future research