Economics

Turns out bribery doesn’t grease the wheels

It seems bribery doesn’t really expedite bureaucracy. That’s according to a paper in the World Bank Economic Review. Here’s the abstract:

Whether demands for bribes for particular government services are associated with expedited or delayed policy implementation underlies debates around the role of corruption in private sector development. The “grease the wheels” hypothesis, which contends that bribes act as speed money, implies three testable predictions. First, on average, bribe requests should be negatively correlated with wait times. Second, this relationship should vary across firms, with those with the highest opportunity cost of waiting being more likely to pay and facing shorter delays. Third, the role of grease should vary across countries, with benefits larger where regulatory burdens are greatest. The data are inconsistent with all three predictions. According to the preferred specifications, ceteris paribus, firms confronted with demands for bribes take approximately 1.5 times longer to get a construction permit, operating license, or electrical connection than firms that did not have to pay bribes and, respectively, 1.2 and 1.4 times longer to clear customs when exporting and importing. The results are robust to controlling for firm fixed effects and at odds with the notion that corruption enhances efficiency.

The paper’s title is “Deals and Delays: Firm-level Evidence on Corruption and Policy Implementation Times” and the authors are Caroline Freund, Mary Hallward-Driemeier and Bob Rijkers.

I don’t find the results too surprising over the medium or long term, as behaviourial processing speeds probably normalise to the development of a “bribery culture”. I don’t think this is incompatible with the idea that the initial bribe in a new institution, policy area, or jurisdiction may offer one-off benefits. Overall, being the first to offer a corrupt incentive (or to respond to a solicitation for one) may therefore be rational, particularly if the transaction is large and discrete. However, overall this action probably shifts expectations and therefore lowers market transparency, efficiency (and tax yields). In other words, the first guy should probably wait in line and take one for the team.

I live in hope that the Americans who slip $20 bills to bartenders as pre-emptive tips for an evening of superior service read WBER.

Standard

  

The view from my window

Abidjan, Côte d’Ivoire

Image

  

The view from my window

Paris, France

Image

  

The view from my window

Lausanne, Switzerland

Image
Politics

British election leaves us all guessing

British politicians are an adversarial species. From the debating societies of our public schools to the physical layout of the House of Commons, British politics rests firmly on the assumption that confrontation is the norm and that collaboration is somehow a dirty word. Harold Wilson famously muttered darkly about “secret deals done in smoke-filled rooms” as if this were the very antithesis of democracy.

smokefilledroom

ccsa by Peter Denton

The smoke-filled rooms may have gone, but the old cliché of smoke and mirrors remains. And, as we head into the general election, with each of the major parties resolutely refusing to seriously discuss the possibility of coalition, we, as an electorate, are left to play a guessing game. Who will deal with whom, and on what terms? Which of their sacred red line is less red than the rest?

The real politics that will take place, the give and take negotiations by which a government will be shaped and formed, will take place out of sight and only after we have made our guesses. The adversarial common sense that governs our public politics means that the electorate might as well play pin the tail on the donkey. This is not a sensible or a mature way to run an election.

Standard

  

The view from my window

Brussels, Belgium

Image

  

The view from my window

Hamburg, Germany

Image