Tesi sul tema "Corruption – Economic models"

[Truncated abstract] The 1997 Asian Financial Crisis raised serious questions about the nature of East Asia's rise to economic prosperity, once labelled as a 'miracle' by the World Bank. In particular, East Asian governments were criticised for allowing rampant corruption to pervade their economies. At a conceptual level, the overwhelming majority of studies argue that corruption, defined as the misuse of public office for private gain, has impeded growth. Empirically, many studies have shown the detrimental impact of corruption on economic growth but few have analysed the particular effect of corruption on East Asia's economic growth in the years leading up to the 1997 Crisis, a period characterised by superior economic growth rates against the backdrop of corruption. This study seeks to fill that gap. By virtue of its clandestine nature, any study on corruption is subject to measurement limitations and this study is no exception. The only available data on corruption are indices published by a handful of various international organisations. Each of these indices follows a similar format: they are based partly or wholly on surveys of the corporate sector in each of the sample countries, the results of which are converted into corruption scores and used to rank the sample countries. Although there is a general consistency in rankings across the different indices, the survey questions tend to equate corruption with bribery. In one survey which questioned respondents about corruption and bribery in separate questions, the results indicated that the two are not necessarily synonymous at least in the minds of respondents. A brief analysis of the nature of corruption within East Asia reveals why the tendency to equate corruption with bribery can be misleading, and therefore raises doubts about the credibility of the aforementioned corruption indices. Many countries in East Asia are shown to harbour a network of patron-client relationships within a centralised framework. ... When using the available corruption indices as measures of corruption in a corruption-growth model that is applied to cross-sectional data covering 141 countries in 1996, corruption is found to have a significant positive relationship with economic growth for two of the corruption indices. However, no particular significant relationship is found to exist for East Asian countries within the sample. The corruption indices are then combined to produce a single index of corruption which is then used in a corruption-growth model and applied to panel data covering 33 countries over a twenty year period from 1984 to 2003. This time the corruption variable is found to have a significant positive relationship with economic growth for East Asian countries (excluding Singapore) during 1986-1996. Finally, the concept of rent-seeking is examined as an alternative to the typical principal-agent model of corruption used in the literature, based on its strong resonance with the particular nature of corruption in East Asia. A measure of rent-seeking is developed, and using cross-sectional data for 57 countries in 1996 reveals that rent-seeking has a significant positive relationship with economic growth.

Esta tese é composta por três ensaios sobre Economia do Empreendedorismo. O primeiro deles trata sobre os determinantes do empreendedorismo no Brasil a partir de modelos de escolha ocupacional, usando os microdados da Pesquisa Nacional por Amostra por Domicílios (PNAD) do ano de 2012. A estratégia empírica adotada empregou os modelos de escolha discreta na estimação da escolha ocupacional. Os resultados demonstraram que existem efeitos significativos para as variáveis: anos de estudos iniciais, sexo, estado civil assim como pensionista e aposentado. Para completar a análise foram estimadas as equações de rendimento, as quais explicam a escolha pela ocupação empreendedora em função dos ganhos relativos ao trabalho assalariado. Já o segundo ensaio tem como objetivo apresentar uma evidência empírica para a relação existente entre empreendedorismo e corrupção nos estados brasileiros, utilizando uma abordagem teórica e empírica. Este artigo utiliza um indicador objetivo de corrupção governamental estadual baseado no Cadastro de Contas Irregulares do Tribunal de Contas da União (CADIRREG) como proxy para a corrupção regional e a abertura de novas empresas per capita como medida para a atividade empreendedora. Foram utilizados o método de dados de painel estático, dinâmico e o método GMMSYS, estes últimos empregados para corrigir possíveis problemas de endogeneidade. Os resultados encontrados mostraram-se coerentes com a hipótese teórica “grease in the wheels”, na qual a corrupção influencia positivamente a atividade empreendedora em países em desenvolvimento com elevada burocracia. Por fim, o terceiro ensaio avalia os impactos do empreendedorismo via inovação a partir do Global Trade Analysis Project – GTAP, um modelo de equilíbrio geral computável (EGC), destacando os impactos no crescimento econômicoe no bem-estar geral da economia. Os resultados mostraram-se coerentes com a literatura da Economia do Empreendedorismo, mostrando que aumento no empreendedorismo conduz a uma elevação no crescimento econômico e bem-estar.
This thesis consists of three essays on the Economics Entrepreneurship. The first deals with the determinants of entrepreneurship in Brazil from occupational choice models, using the data from the National Household Sample Survey (PNAD) of 2012. The empirical strategy adopted has employed discrete choice models in the estimation of occupational choice. The results showed that there are significant effects on the variables: years of initial studies, gender, marital status as well as pensioners and retired. To complete the analysis were estimated earnings equations, which explains the choice by the entrepreneurial occupation in terms of earnings for paid employment. The second test aims to present empirical evidence for the relationship between entrepreneurship and corruption in the Brazilian states, using a theoretical and empirical approach. This article uses an objective indicator of state government corruption based on the Register of Irregular accounts of the Court of Audit (CADIRREG) as a proxy for regional corruption and the opening of new companies per capita as a measure for regional entrepreneurial activity. They used the method of static panel data, dynamic and GMM-SYS method to correct the endogeneity problem. The results proved to be consistent with the theoretical hypothesis "grease in the wheels" in which corruption positively influence the entrepreneurial activity in developing countries with high bureaucracy. Finally, the third test evaluates the impacts of entrepreneurship via innovation from the Global Trade Analysis Project - GTAP, a model of computable general equilibrium (CGE), highlighting the impacts on economic growth and overall well-being economy. The results were consistent with the literatureof Entrepreneurship Economics, showing that increased entrepreneurship leads to a rise in economic growth and well-being.

This thesis is composed of three distinct but related essays. The first essay studies the role of the size of the economy in mitigating the impact of public sector corruption on economic development. The analysis is based on a dynamic general equilibrium model in which growth occurs endogenously through the invention and manufacture of new intermediate goods that are used in the production of output. Potential innovators decide to enter the market considering the fraction of future profits that may be lost to corruption. We find that depending on the number of times bribes are demanded, the size of the economy may be an important factor in determining the effects of corruption on innovation and economic growth. The second essay presents an occupational choice model in which a household can choose either formal or informal entrepreneurship or at the subsistence livelihood. Credit market constraints and initial wealth conditions (bequest) determine an agent's occupational choice. Corruption arises when bureaucrats exchange investment permits for bribes. Corruption worsens credit market constraints. Equilibrium with corruption is characterised by an increase (decrease) in informal (formal) entrepreneurship and a decrease in formal entrepreneurship wealth. Since corruption-induced credit constrained households choose informal entrepreneurship as opposed to subsistence livelihood income in the formal sector, the informal economy is shown to mitigate the extent of income inequality. The third essay explains the role of bureaucratic corruption in undermining public service delivery, public finance, and economic development through incentivising tax evasion. The analysis is based on a dynamic general equilibrium model in which a taxable household observes the quality of public services and decides whether or not to fulfil his tax obligation. Bureaucratic corruption compromises the quality of public services such that a taxable household develops incentives to evade tax payment. We show that corruption-induced tax evasion increases the likelihood of a budget deficit, renders tax payable increase counter-productive, and aggravates the negative effect of bureaucratic corruption on economic development.

In this research report, I evaluate the role of the Directorate on Corruption and Economic Crime (DCEC) which was established by the Government of Botswana in 1994 to play a major role in the fight against corruption and economic crime in the country. I establish what led to the formation of the DCEC and assess whether the DCEC has met its aims and objectives. I also evaluate the legislation that gives the DCEC the powers to fight corruption and economic crime and ascertain if it is sufficient and effective.
I explore the challenges and constraints faced by the DCEC, and assess the effectiveness of the three-pronged strategy adopted by it in combating corruption and economic crime in Botswana. I critically evaluate the successes and failures of the DCEC and find whether the public expectations for the DCEC have been met.

Cette thèse est une contribution à l’analyse économique des institutions politiques et économiques dans les pays en développement. Elle s’inscrit dans la lignée des travaux de la Nouvelle Economie Institutionnelle et de la Nouvelle Economie Politique. Précisément, nous nous intéressons aux institutions telles que la constitution, la corruption et la démocratie. Cette thèse est structurée en cinq chapitres. Le chapitre 1 aborde la problématique des institutions dans sa globalité. Dans ce chapitre, nous définissons le terme institutions comme : « règle et contrainte », « instrument de gouvernance » et « équilibre de jeux ». Nous discutons ensuite des théories du changement institutionnel. Enfin, nous identifions les facteurs influençant la qualité des institutions. Dans le chapitre 2, nous revisitons la théorie de la modernisation. Nos différentes analyses empiriques nous conduisent à conclure que la théorie de la modernisation, telle que définie actuellement et selon laquelle l’éducation, le revenu, l’urbanisation et l’industrialisation influencent la démocratie, n’explique pas la dynamique négative de démocratie en Afrique. Dans le chapitre 3, nous démontrons que le manque d’expérience parlementaire à l’indépendance exerce un effet négatif sur la qualité de la démocratie en Afrique plusieurs années après les indépendances. Le chapitre 4 aborde la problématique du changement constitutionnel en Afrique. Il identifie les facteurs qui influencent la tentative et la réussite du changement de l’article constitutionnel sur la limitation du nombre de mandats présidentiels, et montre qu’ils sont d’ordre institutionnel, macroéconomique, culturel et socioculturel. Enfin, le chapitre 5 met en évidence le fait que les déterminants de la corruption varient selon le niveau de développement des pays et selon les zones géographiques
This thesis is a contribution to the economic analysis of political and economic institutions in developing countries. It is in line with the works of the new institutional economics and the new political economics. Precisely, we are interested in institutions such as constitution, corruption and democracy. This thesis is articulated around five chapters. The first chapter provides a global approach of the analysis of institutions. In this chapter, we define institutions as « rule and constraint », « governance tool » and « game equilibrium ». Then, we discuss the theories of institutional changes. Finally, we identify the key drivers of the institutional quality. In the second chapter, we revisit the modernization theory. The empirical analyses lead to the conclusion that the modernization theory according to which the democracy is mainly driven by the level of education, income, urbanization and the industrialization do not explain the negative dynamic of the democratic process in Africa. In chapter 3, we show that the lack of parliamentary experience at the independence has a negative persistent effect on the current state of democracy in Africa. Chapter 4 adresses the issue of constitutional changes in Africa. It shows that the factors which affect the attempt and the success of the change of the article limiting the number of presidential terms are of institutional, macroeconomic, cultural and sociocultural order. Finally, chapter 5 highlights the fact that the determinants of corruption vary according to the country’s level of development and according to the geographic area

African countries have over the last few decades, experienced a thorny path towards sustained economic growth. Quite a number of researchers have opined that a major factor responsible for their stunted growth path is the prevalence of corruption in the governments of many African countries. However, a group of scholars, called revisionists, have suggested that corruption actually acts as grease in the wheel that ensures the smooth running of an economy, by providing a mechanism to evade inefficient bureaucratic procedures and allow more equitable representation of minority members of the society. With the increasing exposure of African economies to the international community, there is a need to examine the obtainable evidence in relation to corruption and economic growth in African countries. This thesis, therefore, aims to establish the nature of the relationship between corruption and economic growth in the selected African countries. The growth rate of gross domestic product per capita is used to represent the variable, economic growth. The study employs the use of panel data fixed effects and random effect estimation techniques, across 18 countries, over the period of 1997 – 2016. The results show that corruption has a positive relationship with economic growth in the selected African countries. This is in line with the grease in the wheel argument for corruption proposed by revisionists. The results also indicate that corruption has a moderately significant impact on economic growth at 10% level of significance. The literature review suggests that corruption affects economic growth directly and indirectly through mechanisms such as investment (private and public), human capital, openness, and institutional mechanisms, among others.

The main objective of this thesis is to empirically investigate the impact of corruption on the economic development of Bangladesh using annual time series data for the period of 1984-2008. According to my knowledge this is the first attempt to apply a multivariate approach toexamine the relationship between GDP per capita and corruption for Bangladesh using time series data.I have tested the long run relationship between corruption and real GDP per capita for that time span using ARDL Bounds method for co-integration using International Country Risk Guide (ICRG) corruption index as a proxy to measure the level corruption in Bangladesh. The results of co-integration test confirms that there is a long run relation among corruption, GDP per capita and other determinants of GDP over this period. The long run estimates indicate that corruption has direct negative impact on per capita GDP i.e. economic development of Bangladesh. It shows that a 1% increase in the level of corruption during this period has resulted in about 10% reduction in per capita GDPof Bangladesh. It means that corruption is affecting the economic growth of Bangladesh adversely. In other words that Bangladesh could achieve faster economic development if it could curb widespread corruption.

Black Economic Empowerment (BEE) has been a topic of discussion since the dawn of democracy in April 1994. Due to the entrenched inequalities of the past, economic empowerment is very important for the economic growth of the majority of South Africa&rsquo
s citizens. However, significant economic enrichment of black people has not been made, despite, economic success, legislation, state policies and programme interventions. This economic growth is to be realised through the use of preferential procurement as a policy tool for BEE. Whilst sufficient legislation has been enacted to regulate preferential procurement, to favour black people, much still seems to be lacking in the enforcement of the laws in public procurement. Central to the challenges of preferential procurement is the disharmony between the Framework legislation governing preferential procurement and BEE. This discord has seen two visions being followed for preferential procurement
the Procurement Act refers to the beneficiaries of BEE as historically disadvantaged individuals (HDI
s) and the goals for BEE are measured through specific goals which promotes narrow empowerment
the BBBEE Act on the other hand defines black people as the recipients of BEE and through the BEE Codes broad-based empowerment is promoted through seven core elements. This congruency has not served the promotion of preferential procurement, it has created a hindrance that frustrates economic growth for those it is intended. The other quandary that undermines the success of preferential procurement is willful practices engaged by both tenderers and public officials
skills deficiency in the adjudication of tenders and self-interest. The success of BEE through preferential procurement is dependent on a coherently legislated procurement environment fortified by perceptive public officials. The objective of this thesis is to analyse the impact of these challenges on the success of preferential procurement. The study will highlight the main practices that defeat the use of preferential procurement. This will include an analysis of the various legislation and the amendments thereto. In addition the enquiry will examine the proficiency of public officials in the adjudication of public tendering. Recommendations for a successful preferential public procurement environment will be made. The proposed thesis will utilise, inter alia, relevant legislation, case law, theses, journals, books and policy documents.

For decades the question regarding foreign aid’s effectiveness has been disputed. The ongoing debate concerning whether foreign aid yields or prevents economic growth has been discussed by different scholars, though with dissimilar outcomes. Foreign aid is often criticized for creating destruction rather than stimulating developing countries economic growth, though the fundamentals for aid is to create opportunities for developing countries to evolve and gain better socio-economic structures. Different forms of aid are supposed to create different outcomes, i.e. short- and medium-term aid ought to stimulate the country while long-term aid such as infrastructure and education should create growth for the recipient country. The problem of aid is mostly corruption, corrupted regimes hinders the natural development for aid that is to say it hampers the positive outcome aid can produce. So, does foreign aid have a positive impact on recipient countries growth? The aim of this study is to acknowledge the importance of foreign aid. In order to analyse whether foreign aid results in economic growth for developing countries in Sub-Saharan Africa, a crosssection regression analysis has been conducted. To sum up the results of this study foreign aid doesn’t have a significant effect on economic growth in the region Sub-Saharan Africa although other variables such as education and foreign direct investment has a significant effect on growth.

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Coordenação de Aperfeiçoamento de Pessoal de Nível Superior - CAPES
The aim of this research was to estimate, in the short term, the impact of corruption on the income level of the economy and well-being of the Brazilian and Paraná society, by means of the input-output inter-regional Paraná and the rest of Brazil model, in the year 2008. To achieve this objective, it was necessary to collect information from the Accountability Tribunals of the Union and the state of Paraná judgments, to formulate the fate of corruption hypothesis and the corruption repeal hypothesis, to calculate the impact of corruption on the Income level and welfare. To approximate the analysis of the reality, the hypothesis of evasion and/or hoarding of corruption money was also tested. The results show that, in the short term, corruption stimulates the economy product and consequently increases the income level and welfare on Paraná and Brazil society. However, corruption has negative effects only if the amount evaded and/or enshrined is, on average, more than 50% of the amount diverted from the public purse. The indicators-summary of the economic structure clarify that part of this result is explained by the least degree of interconnection between economic sectors tied to government spending. The evidence of the results indicates that tolerance to corruption may be related to the short-term stimulus that corruption provides to the economy, but that tolerance diminishes as society perceives when the levels of income and economic well-being it don't increase in the long run. Another evidence of the results of this research is that combating currency evasion can alleviate the negative effects of corruption on the Brazilian and Paraná economy, and that the fight against the crime of money laundering would reduce the distortions between the system of national accounts and the real product of the economy.
O objetivo dessa pesquisa foi estimar, no curto prazo, o impacto da corrupção sobre o nível de renda da economia e bem-estar da sociedade brasileira e paranaense, por meio do modelo de insumo-produto inter-regional Paraná e o restante do Brasil, no ano de 2008. Para alcançar esse objetivo foi necessário coletar informações dos acórdãos dos tribunais de contas da União e do estado do Paraná, formular as hipóteses de destino da corrupção e de revogação da corrupção, para então calcular o impacto da corrupção sobre o nível de renda e o bem-estar social. Para aproximar a análise da realidade, também foi testada a hipótese de evasão e/ou entesouramento da corrupção. Os resultados mostram que, no curto prazo, a corrupção estimula o produto da economia e, por consequência, aumenta o nível de renda e bem-estar paranaense e brasileiro. Entretanto, a corrupção apresenta efeitos negativos somente se o montante evadido e/ou entesourado for, em média, superior a 50% do valor desviado do erário público. Os indicadores-síntese da estrutura econômica esclarecem que parte desse resultado é explicado pelo menor grau de interconexão dos setores econômicos atrelados aos gastos do governo. As evidências dos resultados indicam que a tolerância a corrupção pode estar relacionada ao estímulo de curto prazo que a corrupção proporciona à economia, mas que essa tolerância diminui à medida que a sociedade percebe que os níveis de renda e bem-estar econômico não aumentam no longo prazo. Outra evidência dos resultados dessa pesquisa é de que o combate à evasão de divisas pode amenizar os efeitos negativos da corrupção sobre a economia paranaense e brasileira e, ainda, que o combate ao crime de lavagem de dinheiro reduziria as distorções entre o Sistema de Contas Nacional e o real produto da economia.

La théorie de l'agence a offert une analyse approfondie des conditions sous lesquelles les incitations parviennent à réconcilier les intérêts divergents du principal et de l'agent. Les essais présentés dans cette thèse évaluent la pertinence empirique de ces résultats face à l'intervention d'une tierce partie dans trois situations-types : le comportement de corruption, les choix de pratique des médecins spécialistes et la demande de travail au noir

This dissertation consists of three chapters that, theoretically and experimentally, address the effectiveness of anti-corruption mechanisms. In the first chapter, I analyze the effects of monitoring on an agent's incentives in a two-period principal-agent model in which the agent decides on his effort and corruptibility. The agent's type and strategy are unknown to the principal. I compare incentive-compatible wages under three different scenarios: 1) the principal does not monitor and only observes output; 2) the principal monitors the agent's effort choice; and 3) the principal monitors the agent's corruptibility. I find that monitoring of effort improves the sorting of types but it might also give the agent more incentive to be corrupt. Monitoring of corruption does not improve the sorting of types but it negatively affects the agent's incentive to be corrupt. In the second and in the third chapter I analyze experimentally how promising as anti-corruption measures leniency policies really are. Buccirossi and Spagnolo (2006) had conjectured, based on theoretical work, that ill-designed legal environments might, in fact, produce results that contradict the intentions of the designers of the leniency policies. And, indeed, I demonstrate, for the first time as far as I know, that real-world subjects...

碩士
國立中央大學
經濟學系
102
In most of academic literature, the positive impact of Foreign Aids (FA) and Foreign direct investment (FDI) on economic growth are obtained. In developing countries, however, they often do not have sound political and economic systems. We can always hear about corruption news in these countries. Therefore, we find out indirect impact of corruption and institutional factors that influence economic growth. This paper aims to empirically investigate the effect of FA and FDI on economic growth in developing countries, under the indirect impact of corruption and institutional factors. Considering the possible difference in the relationship between FDI and FA on economic growth for different corruption and institutional factors' level, this study employs the technique of the threshold model to proceed with empirical estimates. Based on a dataset of 148 non-OECD countries over the 1996-2011 period. The empirical results show that stronger FDI stimulate more economic growth in the case of the conventional pooled cross section regression, while FA are not statistical significance. After considering the threshold effects, FDI still have a significantly positive impact on economic growth for countries with lower level of corruption and higher degree of economic freedom, but for countries with higher level of corruption and lower degree of economic freedom, the impact of FDI on economic growth is statistical insignificance. FA are still helpful for economic growth when the countries have higher degree of economic freedom, while the impact is ambiguous under the indirect effect of corruption.

The informal sector has emerged as an important sector in Africa where many countries are striving to attain Sustainable Development Goal (SDG) number 8 on decent work and economic growth. The presence of a growing number of individuals and firms in the informal sector in Africa and the need to attain SDG 8 through formalisation have reignited the debate on informality and its possible causes and effects on the growth trajectory of African economies. Empirical questions on the determinants of informality are still not adequately answered. One question which continues to generate a lot of debate and contrasting results is the relationship between the informal sector and corruption. Both informality and corruption have emerged as ‘twin challenges’ in Africa, with a far reaching impact on economic development. The relationship between the informal sector and corruption has been an inconclusive and a polemical issue in both academic and developmental discourse. From a theoretical perspective, the two can be substitutes or complements, but the exact nature of the relationship is not clear. The main objective of this study is to empirically investigate the relationship between the informal sector, corruption and economic development in Africa, over the period 2005 to 2015. The objective of the study was answered through two ways: theoretical and empirical methodology. In the theoretical methodology, a classical approach was applied. The classical theory suggests that in the presence of a market for corruption, corruption control can reduce the size of the informal sector through reducing the supply of corruption, thereby raising the price of corruption. The negative relationship between corruption control and the size of the informal sector is supported by the described empirical data for Africa. The results from descriptive statistics, in particular the scatter plots, demonstrate that control of corruption, government effectiveness and economic development as measured by the Human Development Index (HDI) are negatively associated with the size of the informal sector. The negative association between the control of corruption and the size of the informal sector entails that corruption increases the size of the informal sector. With regards to the empirical solution, the total population of 54 African countries was considered for the study. However, a panel of 46 countries was analyzed as the other eight countries, although considered together with the rest, were scientifically isolated from the panel due to data challenges. Robustness checks were carried out to check if estimates are not sensitive to sample size or region. Further, for purposes of this study, the sample was also divided into Southern and Eastern Africa, and Northern and Western Africa. Panel data was applied in order to account for both time and country-specific heterogeneity. The use of panel data allows one to study variability through comparability of the level of informality in countries such as Zimbabwe where the economy has remained largely informalised. Four panel estimators, namely, the Pooled Effects, Fixed Effects or Within Effects, Random Effects or GLS, and Dynamic Panel Model (Arrelano-Bond), were applied. Model specification tests identified the Fixed Effect Model as the most appropriate model. Hence, the discussed results are largely from the Fixed Effects Model. On measurement of informality, the study relied on the shadow economy estimates constructed by Medina and Schneider (2018) for 158 countries from 1991 to 2015. On corruption, the study used the Control of Corruption Index (COCO) published by the World Bank, in the Governance Index Report. Unlike previous studies which used GDP per capita only as a proxy for economic development, this study went a step further and used Human Development Index (𝐻𝐷𝐼) as a proxy for economic development. Profit tax as a percentage of GDP was also tested as a potential determinant of informality. The endogeneity of the corruption variable was corrected using an instrumental variable. The findings show that an improvement in the control of corruption or government effectiveness reduces the level of informality in Africa while, an increasing informal sector is a breeding ground for corruption. The two variables are complements or jointly determined. Countries with large underground economies possess high levels of corruption, and countries with high levels of corruption are associated with large underground economies. The complementarity of corruption and the size of underground economy implies that policies that target one of the two will also help in tackling the other. In addition, the results show that economic development reduces the magnitude of informality, while a larger informal sector today implies a bigger informal sector in the future. One of the findings of this study is that previous studies which applied GDP per capita as a measure of economic development largely underestimated the impact of economic development on the size of the informal sector. The findings of the study show that the negative association between the control of corruption and the size of the informal sector holds for both the Northern and Southern regions of Africa. The impact is however bigger in the Northern Region, as a marginal improvement in corruption control has a bigger impact in reducing the size of the informal sector compared to the Southern Region. The results from the study also show that the level of informality in a country has a memory. A bigger informal sector today is likely to propel the level of the informal sector in the future. The findings show that a growth of the informal sector by one percentage point today will increase the informal sector by about 0.185 percentage points in the following year. The results from time dummies also indicate that the size of the informal sector in Africa started to grow significantly during the financial crisis period in 2009. The main implication of these findings is that African countries can target one of the two in order to reduce both the size of the underground economy and corruption. The other implication is that a policy that targets curing one of the problems will have positive external effects in curing the other unintended problem. Furthermore, the findings imply that African countries with large underground economies may continue to experience growing informal economies due to lack of regulatory capacity and weak enforcement. Solving the two problems is a double hurdle for African countries.
Economics
D. Com. (Economics)

This dissertation builds on Cezar and Escobar's (2015) study of the relationship between institutional distance and foreign direct investment (FDI), but focuses instead on the nexus between corruption distance and FDI. Along the lines of their study, this dissertation uses a two-stage gravity model derived from the framework of heterogeneous firms to empirically estimate the impact of corruption distance on the inward and outward FDI of European transition economies. This dissertation contributes to the literature in several aspects. First, it proposes a new method for measuring corruption distance, considering the importance of firms' previous experience to the development of necessary skills for navigating a foreign business environment. Second, the empirical study distinguished the impact of corruption distance on the extensive and intensive margin by using a rich dataset with three different corruption indices, which thereby differs from most previous studies on this topic. This is also one of the few papers that specifically study this topic in the context of European transition economies. The results show that both conventional and adjusted corruption distance based on the control-of-corruption index only reduces the extensive margin of transition economies' FDI; and that the magnitude of...