Reference no: EM132253418

Discussion :

Read through the below post and provide any on of the following:

. Ask a probing question, substantiated with additional background information, evidence or research.

· Share an insight from having read your colleagues' postings, synthesizing the information to provide new perspectives.

· Offer and support an alternative perspective using readings from the classroom or from your own research.

· Validate an idea with your own experience and additional research.

. Posting should be at least 250 words and require some information from the text, academically reviewed paper, some significant commentary that requires knowledge of the subject matter, a web link to an article or other source.

Post:

Corruption is considered a strong constraint on growth and development. corruption helps to overcome cumbersome bureaucratic constraints, inefficient provision of public services, and rigid laws especially when countries institutions are weak and function poorly. Some research considers corruption a ‘grease the wheels' instrument.

To identify this relationship is not an easy task, since bribery and firm performance can influence each other through other unobservable factors.

In addition, it is difficult to have good quality data on both corruption and firm financials. Therefore, we use firm economic performance data from the Amadeus database, and enrich them with the information on bribery practices from Beeps. To combine the two datasets, we consider ‘local markets' as clusters formed by country, double-digit industry, firm size, and location size.

Within those markets we compute the mean and dispersion of individual firm bribes and assign them to every firm from Amadeus belonging to the same cluster. Given that we cannot observe firm-specific bribery practices, these two measures are the best way to characterize local bribery environments.

"This makes them more eager to hold on to political power," they continue, "and creates a benign feedback loop between economic growth and corruption: high growth reduces corruption which, in turn, increases growth."

Nevertheless, what these studies suggest is that, by itself, corruption is much less important for a country's economic health than outside factors like the quality of its institutions, the degree of political freedom, and government policy or the state of the national and global economy. "the relationship between corruption and growth is regime specific." What do you think?

References:

Weber, J. (2008). The Impact of Corruption on Economic Growth: Does Government Matter? Academy of Management Perspectives, 22(4), 80-82.

Watt, B. (2015). Corruption in Government and Business. BusiDate, 23(2), 5.