Corruption in Turbulent Times: A Response to Export Booms and Busts

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The evidence of a “voracity effect” of temporary windfalls on corruption in weak institutional contexts has been widely documented. However, the reverse hypothesis of a “craving effect” on corruption stimulated by resource shortages has theoretical foundations but less empirical support. This paper aims to reconcile these two seemingly competing hypotheses within a unified analytical and empirical framework. Exploiting data from the World Bank Enterprise Surveys on 19,616 bribe reports and other characteristics of firms located in 38 developing countries, micro and macro-level OLS estimations of the effect of export booms and busts on firm bribery are conducted. A robust positive effect of both export booms and busts on firms’ bribery is found, when financial and democratic institutions are failing. Conversely, a robust negative effect of booms and busts is evidenced when institutions are better off. Therefore, this paper gives additional evidence on the importance of institutional safeguards against corrupt practices in times of abundance, and new evidence on their importance in times of shortage.

Cariolle, J. 2015. "Corruption in Turbulent Times: A Response to Export Booms and Busts" Ferdi Note Brève B135, décembre 2015