Bai, Jie, Seema Jayachandran, Edmund Malesky, and Benjamin Olken. 2017. “Firm Growth And Corruption: Empirical Evidence From Vietnam”. The Economic Journal, 1-27.
This article tests whether ﬁrm growth reduces corruption, using data from over 10,000 Vietnamese ﬁrms. We employ instrumental variables based on growth in a ﬁrm’s industry in other provinces within Vietnam and in China. We ﬁnd that ﬁrm growth reduces bribes as a share of revenues. We propose a mechanism for this effect whereby government ofﬁcials’ decisions about bribes are modulated by inter-jurisdictional competition. This mechanism also implies that growth reduces bribery more for more mobile ﬁrms; consistent with this prediction, we ﬁnd a larger effect for ﬁrms with transferable rights to their land or operations in multiple provinces.